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The most reckless gambler, Anglo Irish Bank, found itself facing imminent default on the night of Sept. 29, 2008, with its predominantly British, German and American financiers demanding repayment. Ireland's previous government, desperate to keep its property-driven Celtic Tiger boom alive, unveiled an overnight insurance scheme that it billed hopefully as "the cheapest bailout in history," with expectations that taxpayers wouldn't have to pay a penny as reassured investors kept buying Irish bank bonds. EU partners, outraged and baffled by the unilateral Irish move, warned that Ireland was making a promise it couldn't keep if the crisis worsened. The doomsayers proved right as Ireland's guarantee soon became a legally binding obligation to nationalize the banks' bond repayment promises. How did Ireland's six banks become three? The government closed down Anglo and Irish Nationwide, and merged the ESB Building Society into Allied Irish Banks. It nationalized and split up Irish Life & Permanent, a process completed this month when it struck a
euro1.3 billion deal to sell the profitable Irish Life insurance and pensions arm to the parent company of Canada Life. The bloodbath has left Allied Irish and Permanent TSB, a bank precariously exposed to lossmaking residential mortgages, under state ownership. Only Bank of Ireland remains in largely private hands, although the government retains a 13 percent stake. Most of the banks' biggest property loans today have been transferred to a state-owned "bad bank," the National Assets Management Agency, which has been transformed into Ireland's biggest landlord. Its managers are committed to gradual sales of its portfolio
-- including derelict shopping malls, castle hotels with moats of red ink, and half-built residential neighborhoods in the middle of nowhere
-- over the coming decade.
[Associated
Press;
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