Irish firm rejects aid

Bloomberg

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Irish Life & Permanent, Ireland’s largest mortgage lender, said it doesn’t need the government’s financial support after posting a full-year loss and forecasting an increase in loan losses over the next three years.

Losses on home loans in Ireland and the U.K. may rise to as much as 1.6 percent of the company’s total loan book, Dublin- based Irish Life said in a statement yesterday. Its loan-loss provision was 0.21 percent of total loans last year.

Irish Life, unlike rivals Allied Irish Banks and Bank of Ireland, said it has no exposure to commercial real estate developers and that it can cover losses on its mortgage book without seeking a government bailout. The Irish government last month said it would pump 3.5 billion euros ($4.4 billion) apiece into Allied Irish and Bank of Ireland.

"We don’t need any capital from the government," Finance Director David McCarthy told reporters. "The businesses are generating significant surplus capital, which will serve us well as we make our way through this downturn."

Irish Life posted a net loss of 433 million euros in 2008, compared with a profit of 404 million euros a year earlier. Investment returns at its insurance unit fell by 640 million euros, and the company wrote down the value of its TSB banking unit by 170 million euros. Profit at the bank fell as loans in arrears increased.

The deepening recession in Ireland and the U.K. is pushing up unemployment and hurting home values, making it harder for many people to repay mortgages, the bank said.

Deepening recession

Irish Life also took a 92 million-euro writedown on debt securities issued by three Icelandic banks and put aside a 30 million-euro provision for debt issued by Lehman Brothers Holdings Inc. The Irish company plans to cut about 50 million euros in costs this year by freezing pay and cutting bonuses.

A new chief executive officer may be appointed within the next three months, the lender said. Former CEO Denis Casey resigned last month after Irish Finance Minister Brian Lenihan said the company engaged in deposit transfers with Anglo Irish Bank Corp. that may have created a "false impression" about Anglo’s deposit base. Those transactions "were wrong" and shouldn’t have been carried out, Chairman Gillian Bowler said in the statement. "I apologize unreservedly for them