Scepticism over £25bn cost of Anglo Irish

Anglo Irish Bank yesterday said the bill for its rescue should not exceed €25 billion (£21bn) but investors remained sceptical after mounting losses raised pressure on Ireland to shut down the nationalised lender.

Once the posterchild of the "Celtic Tiger" economy, the cost of bailing out Anglo left Ireland with the biggest budget deficit in the European Union last year, undermining the government's austerity drive and raising its borrowing costs.

Anglo Irish chief executive Mike Aynsley's view that the bank would not need more than the €25bn previously flagged by the government failed to soothe markets already rattled by concerns over eurozone debt.

The bank also reported a first-half loss of €8.2bn - a record deficit for an Irish company - after taking an impairment charge of €4.8bn and booking a loss of €3.5bn for transferring loans to NAMA, Ireland's state-run "bad bank".

One analyst who declined to be named said: "It's a pretty brave comment by the management.

"As a taxpayer I would be somewhat relieved, and I think it would be a nice support for the bond market, but I'm scratching my head over it."

In an analysis criticised by Irish officials, ratings agency Standard & Poor's estimated last week that the final cost of purging Anglo of bad debts accumulated during the property boom could hit €35bn.

Finance minister Brian Lenihan did not put a final figure on the bailout but said clarity on the total cost would come when Ireland reaches an agreement with the European Commission on what to do with the lender.