Anglo Irish Bank Split In Two

The bank that led the way in Ireland's reckless lending has been told by the government that it will never lend another cent.

Finance Minister Brian Lenihan has confirmed the government plans to split Anglo Irish bank into two new banks.

One will be a "funding bank", essentially a savings bank that will take over all money on deposit in Anglo.

The other will be an "asset recovery bank" which will take over all the loans that are not being transferred to NAMA, with a view to working them out or selling them off over time.

Neither will trade under the Anglo name.

The board of Anglo Irish Bank had hoped planned to make a "good bank" out of the funding arm, allowing it to issue new loans to niche markets, but the government rejected this.

The winding down of Anglo is expected to take between 10 and 15 years.

Mr Lenihan said shutting the bank down any sooner was simply not possible.

"The practical reality is that the bank owes €72bn - the bulk of it to its depositors. If we let this go, we let Ireland go," he said, "We cannot contemplate that."

He accepted that the plan was not a "silver bullet" that would restore confidence in the Irish economy, but said it was part of a series of measures aimed at reassuring markets.

"Resolution of this, our most distressed institution, is essential to the promotion of confidence and stability in our financial system," he said

Mr Lenihan said the final cost of the plan would be known by early October.

Already, the taxpayer has pumped more than €23bn into the lender.