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Allied Irish Banks make huge loss Allied Irish Banks make huge loss
(40 minutes later)
Allied Irish Banks (AIB) has reported pre-tax losses of 2.6bn euros (£2.4bn) for 2009 after what it called "a very challenging year."Allied Irish Banks (AIB) has reported pre-tax losses of 2.6bn euros (£2.4bn) for 2009 after what it called "a very challenging year."
AIB's Northern Ireland business, First Trust, lost £86m compared to a £33m profit in 2008.AIB's Northern Ireland business, First Trust, lost £86m compared to a £33m profit in 2008.
The bank's performance in the Irish Republic was disastrous with total losses there reaching 3.5bn euros.The bank's performance in the Irish Republic was disastrous with total losses there reaching 3.5bn euros.
The bank has warned that the outlook and environment remains "extremely challenging."The bank has warned that the outlook and environment remains "extremely challenging."
The results showed an underlying operating profit of almost 3bn euros but this was wiped out by the bank having to set aside more than 5bn euros to cover loans it thinks might not be repaid.The results showed an underlying operating profit of almost 3bn euros but this was wiped out by the bank having to set aside more than 5bn euros to cover loans it thinks might not be repaid.
The figures are the latest in a long line of bad news from the Irish banking sector which has been crippled by the bursting of a property bubble.The figures are the latest in a long line of bad news from the Irish banking sector which has been crippled by the bursting of a property bubble.
PropertyProperty
Almost 30% of AIB's loans are now described as "criticised" - that means the bank is having to pay special attention to the loans because they are overdue, repayments are being missed or the borrower is in difficulties.Almost 30% of AIB's loans are now described as "criticised" - that means the bank is having to pay special attention to the loans because they are overdue, repayments are being missed or the borrower is in difficulties.
Property and construction comprise 65% of criticised loans, mostly relating to customers in the Irish Republic.Property and construction comprise 65% of criticised loans, mostly relating to customers in the Irish Republic.
Levels of arrears in the residential mortgage portfolio more than doubled over the year, with those in arrears for over 91 days at 1.96%, up from 0.7% in December 2008.Levels of arrears in the residential mortgage portfolio more than doubled over the year, with those in arrears for over 91 days at 1.96%, up from 0.7% in December 2008.
At First Trust more than £200m had to be set aside to cover loans which might not be repaid, mainly in the property sector.At First Trust more than £200m had to be set aside to cover loans which might not be repaid, mainly in the property sector.
That wiped out an underlying operating profit of £119m.That wiped out an underlying operating profit of £119m.
'Dysfunctional'
The bank said the First Trust results reflected "the sharp deterioration" in the Northern Ireland economy, particularly within the property sector.The bank said the First Trust results reflected "the sharp deterioration" in the Northern Ireland economy, particularly within the property sector.
Speaking on RTE radio, AIB Group Managing Director Colm Doherty said the bank has been approached by "a number" of other financial institutions with regard to a investment in the bank, but he declined to say who those were.
He said that once the bank had exhausted all of the other options in relation to raising capital, only then would he see the bank going back to the Irish government, though he could not rule this out.
He described the current retail banking environment in Ireland is "quite dysfunctional". He said the bank is being charged more for the money it borrows than it is charging its customers.
AIB losses are expected to be dwarfed when another Dublin-based bank, Anglo Irish, reports its results in the coming weeks.AIB losses are expected to be dwarfed when another Dublin-based bank, Anglo Irish, reports its results in the coming weeks.
Anglo, which was nationalised by the Irish government, is expected to report an annual loss of up to 12bn euros.Anglo, which was nationalised by the Irish government, is expected to report an annual loss of up to 12bn euros.