Prepare a critical evaluation of a public company (of your choosing) that has suffered from a severe financial crisis or become insolvent at some time over the past 10-15 years. Your essay should include (but not be limited by) a discussion about the following issues:
- a (brief) history of the company and how it formed
- its key initial success drivers, financial milestones or achievements
- any major changes in its structure over its life – ie mergers/demergers/major capital management programs etc
- the generally accepted reasons that caused its failure
- the social impact of its failure – both internally (ie staff) and externally, across the wider business community and society in general
- a summary of the lessons learned (This might include regulatory changes)
This essay has been undertaken for presenting a critical evaluation of a public listed company that has suffered insolvency due to financial crisis. In this context, the essay in particular discusses about the selected company’s history. Initial success drivers, major changes in its structure, generally accepted reason that caused its failure, the social impact of the failure and at lastly a brief summary of the lessons learned. The company selected in this context is Anglo Irish Bank that has merged with the Irish nationwide building society in the year 2011 after nationalization in the year 2009.
Brief History of the Company
Anglo Irish Bank was an Irish bank that has ceased its operations after nationalization in the year 2009. It was established in the year 1964 headquartered in Dublin in Ireland. The banking corporation was one of the recognized banks within Ireland that mainly dealt in the business of commercial banking. The bank however had only limited presence within the major Irish cities and also have divisions within wealth management and treasury units. The banking corporation operates mainly within the cities of Austria, Switzerland, the UK and the US. The bank has a history of achieving high success in the initial year of its establishment. The acquisition policy adopted by the bank in the year 1988 supported its plan of business expansion and growth. As a result of its policy of acquisition, the banking corporation acquired Irish Bank, Royal Trust Bank, Credit Lyonnais and many other banking corporations (Byrne, 2015). This enabled it to gain a dominant position within the banking sector at an international level as it started conducting its operations within the developed economies such as the US and the UK. The acquisition policy of the bank has caused it to gain the position of one of the largest bank within Ireland (Kelly, 2014).
The banking corporation decline began in the year 2008 when the downturn in the Irish property market has started. The bank has high exposure to property lending and has provided large amount of loans to the property developers. Thus, the collapse of the property market had a large negative impact on the property market. The loan fraud was identified within the bank when its chairman has admitted to have a total loan of about £ 87 million and also resigned from his position. The resignation was followed by that of its non-executive director beginning its collapse (Neill, 2011). The Irish government in the year 2009 after consultation with the Board of the bank decided to nationalize the bank so that it can be taken into the public ownership. The Anglo Irish Bank Corporation Act was passed in the year 2009 for transferring the ownership of the bank to the minister of finance. The Dublin and London Stock Exchange has stopped trading in the Anglo Irish shares. The bank has undergone a merger with the Irish Nationwide Building Society and this lead to establishment of a new company known as Irish Bank Resolution Corporation in the year 2009 (Carswell, 2013).
Key Initial Success Drivers, Financial Milestones or Achievements
The bank afterits initial years of establishment has enjoyed larger success with recognizing its presence in the international market. The acquisition and the expansion policies of the bank enabled it to achieve growth and development within the global banking sector. The shareholders of the banking corporation also received high dividends. The bank’s profits have risen by 3.4 per cent and shareholders receive an increase of about 22.5 per cent in the dividend payment in the year 2003. The executive’s and the director’s were overwhelmed by the bank’s performance due to large rise in the dividend and
This problem has been solved.
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