Annual Report & Accounts 2009 - Anglo Irish Bank

to acquire these assets they are included on the balance
sheet as either investment property held on own account or
interests in associate and joint ventures. Given the significant
decline in property values since these assets were acquired the
Group does not expect to recover all of its initial investment
in these assets. Accordingly, losses of €247 million have been
recognised due to the decline in the recoverable amounts of
the assets in the period. In addition, pay fixed swaps were put
in place to hedge interest payments on these investments.
Negative fair value movements of €47 million have been
incurred by the Bank on these swaps due to the decline in
long term market interest rates over the financial period.
The Group is currently exploring its strategic options
regarding these assets.
Costs
Operating expenses - €m
15 Months
ended
31 December
2009
Year ended
30 September
2008
Staff costs 155 185
Share based payments 31 21
Other administrative expenses 117 95
Depreciation & amortisation 35 27
Recurring operating expenses 338 328
Exceptional costs 42 –
Total operating expenses 380 328
Total recurring operating expenses for the 15 months to
December 2009 are €338 million compared to €328 million in
the 12 months to September 2008, a reduction of €58 million
(18%) on an annualised basis.
On an annualised basis staff costs for the 15 months to
December 2009 reduced by €61 million (33%) compared to the
12 months to September 2008. These savings were achieved
due to a number of cost saving initiatives including the
elimination of the variable component of staff remuneration,
a reduction in average headcount of 183 (10%) and reversal
of €22 million of September 2008 accruals mainly in respect of
Anglo Irish Bank
Annual Report & Accounts 2009
performance related compensation. The savings in staff costs
are partially offset by an increase in the share based payment
scheme costs. This includes an accelerated charge following
the extinguishment of share options upon nationalisation. This
is an accounting charge recognised in accordance with IFRS
and does not represent any value or payments to affected
employees for the termination of their share options.
The reduction in average staff numbers from 1,864 to 1,681
is due to the sale of the Austrian private banking business,
(99 people), non–replacement of departing staff and a
small number of early leavers in the voluntary redundancy
programme announced in November 2009. Group headcount
at 31 December 2009 is 1,537. The full effect of the voluntary
redundancy programme is not reflected in this number. After
completion of the redundancy programme the headcount
will have fallen by approximately five hundred from that of
September 2008.
Cost management and control of discretionary spending has
seen other recurring administrative expenses fall by 2% on a
like for like annualised basis.
Exceptional costs of €42 million were incurred in 2009 (2008:
nil) and primarily relate to redundancy costs and professional
fees associated with the Bank’s restructuring process, and
investigations and reviews into legacy issues. These exceptional
costs can be broken out as follows:
Exceptional costs - €m
15 Months
ended
31 December
2009
Year ended
30 September
2008
Redundancy & other staff costs 13 –
Professional fees 25 –
Provision for onerous lease contracts 4 –
Total exceptional costs 42 –
A detailed cost review was undertaken as part of the Bank’s
restructuring process to ensure alignment of the cost base
with revised business and activity levels. As a consequence
a voluntary redundancy programme was announced in
November 2009. A key component of the Bank’s restructuring
process is the sale of eligible assets to NAMA which has
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