Dáil continues emergency debate on IBRC wind-up Bill
on 07/02/2013 01:37:17
Finance Minister Michael Noonan introduced emergency legislation just after midnight to cut the immediate cost of the nationalisation of the rogue lender - now known as the Irish Bank Resolution Corporation (IBRC) - following negotiations with the European Central Bank (ECB) in Frankfurt.
"Once the legislation is passed, joint special liquidators will be appointed to IBRC with immediate effect to wind up its business and operations," Mr Noonan said.
The IBRC has assets worth €12bn, the Government said.
He warned that not dealing with the issue could result in potential liabilities of up to €40bn for the country.
The Government was forced to announce the liquidation plan in overnight emergency legislation with European money markets closed amid fears existing bondholders in the defunct bank would cut and run.
Taoiseach Enda Kenny urged politicians to accept the bill or risk costing the state in the region of €40bn in liabilities.
The liquidation will not affect the court cases or legal action taken by the Director of Public Prosecutions, the Government also said.
The scheme has been designed alongside a plan to replace existing promissory notes - high interest IOUs worth €28bn to fund the former Anglo - replaced with several long-term Government bonds.
Patrick Honohan, governor of the Central Bank of Ireland, was leading negotiations on that front with counterparts from the European Central Bank (ECB) in Frankfurt.
President Michael D Higgins cut short an official visit to Rome to return to Dublin to sign legislation into law if necessary.
The board of the Irish Bank Resolution Corporation (IBRC), the rebranded Anglo, has been stood down by the Government as part of the plan.
IBRC deposit holders and bondholders will be repaid, Mr Noonan said.
Opposition politicians rounded on the Government for introducing the emergency legislation claiming there was no write-down on debt.
Under the liquidation, any actions brought by regulators or state prosecutors in relation to Anglo's collapse will not be impacted.
IBRC will cease to exist after July 1. All contracts for the 800-plus IBRC employees will be terminated with immediate effect.
But the majority of workers will be retained by the state's bad-bank, the National Assets Management Agency (Nama) - set up to repair the balance sheets of the country's main banks by removing big stake property loans.
It will also take on IBRC debts.
It is understood that will also include the €2.8bn run up by bankrupt former billionaire Sean Quinn who lost his fortune and business empire on the back of secret share gambles on Anglo.
"The remaining subsidiaries will be wound up or sold by the special liquidators to optimise value, and once all of its obligations are resolved, IBRC will cease to exist," Mr Noonan said.
The Minister also apologised for the unexpected nature of the announcement.
Accountancy firm KPMG will be appointed to oversee the liquidation of IBRC.
Under the separate plan to resolve the promissory note issue, the state would make annual interest payments on the bonds - believed to run out between 30 and 40 years - and would pay the principal sum upon its expiry.
In talks for two years
The Government has been in talks with European leaders and officials in Brussels and Frankfurt since early 2011 to cancel a repayment scheme of €3.1bn a year until 2023 for the Anglo promissory note - a funding mechanism devised to use Central Bank money without breaching strict European regulations.
The next instalment was due next month.
A formal decision on whether the ECB has signed off on the proposal is not expected to be announced until this afternoon.
Promissory notes had been used to cover debts at Anglo of more than €25bn, and subsequently debts of the Irish Nationwide Building Society worth €5.3bn. The IBRC is now made up of both former banks.
Around €3bn has already been paid off the total €31bn cost, leaving €28bn outstanding.
Ireland's total bank bailout cost about €64bn.
The thinking behind the proposal would be to give the State more time to pay off the debt, thus reducing the cost of the principal sum.
The text of the Bill states it aims to "provide for the orderly winding up of the affairs of IBRC to help to address the continuing serious disturbance in the economy of the state".