What happened after the music stopped at Ireland’s most unsuccessful bank

Like a bad smell, it was once feared that IBRC/Anglo would hang around, at least until its long-term wind-down target date of 2020. A slow, orderly dismantling of the worst bank in the world was the best option, citizens were told.

Everything changed overnight when the Dáil discussed the issue until the small hours of February 7th, 2013 and the Government decided to immediately liquidate IBRC as part of the refinancing of the Anglo promissory notes.

Was this snap decision the right call for tax-payers?

Judging from the progress report published yesterday on the first 14 months of the IBRC liquidation, it appears so.

The report highlights that the operating costs of the bank until 2020 were estimated at €1.1 billion, and that these costs will not now be incurred.

This is true, but it would be facile to hold this number up as a hard saving: much of the €1.1 billion would have been defrayed by income generated until 2020 from IBRC’s near €22 billion rump of assets.

The real gain for taxpayers comes from the annual reduction in the State’s interest bill from the bank bailout. The deal to refinance the Anglo promissory notes will save the State €20 billion in payments over the next decade. It would not have been possible without the liquidation of IBRC.

Largest insolvency

The IBRC wind-up is the largest insolvency in Irish corporate history. About €21.7 billion of loan assets were brought to market in six separate sale processes late last year and early this year. The €2.5 billion of assets left over will be brought to market later this year, with the whole process due for completion by the middle of next year.

It is not disclosed how much IBRC received for the loans it has sold, but it has been more than enough to cover the €12.9 billion advanced by Nama to fund the assets in liquidation. It is unlikely there will be anything left to cover unsecured creditors, however.

Loans sold so far relate to 15,000 different borrower groups, with the collateral scattered across 22 different countries.

About 201 bids were received from 345 interested parties across the six sale portfolios: projects Evergreen (Irish corporate loans), Sand (Irish home loans), Pebble (US and UK hotels and shops), Rock (UK development loans), Stone (Irish development loans)and Salt (mostly German property).

Up for grabs

All of Rock, Salt and Pebble have been sold. Unsurprisingly, just 64 per cent of Sand was sold and the remaining 6,500 mortgages will be brought to market once again as part of the final portfolio sale. About €400 million of Evergreen’s corporate loans and €1.4 billion of Irish commercial property from Stone also remain up for grabs.

IBRC has become embroiled in about 1,100 legal battles, according to the report, which includes about 20 “public interest” cases. The biggest of those, litigation concerning Seán Quinn, is the last major legal obstacle to the final execution of IBRC.

The report highlights risks to IBRC as it loses its most senior IT staff. It also refers to “the increased risk that [IT]staff may breach data, security and confidentiality policies” as the final death knell draws near. The wind-down is almost complete, but potential land mines remain.