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Irish Bank Resolution Corporation (IBRC)
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On 15 January 2009, the Irish government decided, having consulted with the Board of Anglo Irish Bank, to take steps to enable the bank to be taken into public ownership.
The decision was taken after consultation with the Central Bank and the Financial Regulator. The Anglo Irish Bank Corporation Act 2009 was passed and transferred the ownership of Anglo Irish Bank to the Minister for Finance.
The State invested €4 billion in ordinary shares in Anglo Irish Bank in June 2009 and a further capital injection of €100 million in Irish Nationwide Building Society (INBS) was made in 2010, in the form of special investment shares.
Additional capital injections into Anglo Irish Bank and INBS were by way of promissory notes. By 31 December 2010, the total promissory notes held by Anglo Irish Bank and INBS was €30.6 billion. In total, therefore, the State invested €34.7 billion in Anglo and INBS.
In early 2011, the majority of the deposits held in Anglo Irish Bank and INBS were transferred to Allied Irish Banks and Permanent TSB respectively and in July 2011 Anglo Irish Bank and INBS were merged to form Irish Bank Resolution Corporate (IBRC).
In February 2013, following discussions between the Irish Authorities and the ECB, the IBRC promissory notes were exchanged for a portfolio of long-term government bonds which have a weighted average maturity of 34 to 35 years in comparison to the weighted average maturity of the promissory notes of 7 to 8 years.
The replacement of the promissory notes with long dated Irish government bonds has significantly smoothed Ireland’s debt profile and reduced near-term borrowing requirements.
In February 2013, the Irish Bank Resolution Corporation Act 2013 was enacted and a special liquidation order was signed by the Minister for Finance placing IBRC into special liquidation. The joint special liquidators, Kieran Wallace and Eamonn Richardson, now control the operations of IBRC pursuant to the IBRC Act 2013.
The success of the liquidation to date has far exceeded expectations at the outset of the Promissory Note transaction in 2013 with IBRC staff along with the Special Liquidators and their advisors having worked tirelessly to plan and execute the liquidation of IBRC.
The Department of Finance has published regular Progress Update reports which provide a comprehensive overview of the breadth of work performed in conducting one of the most complex and challenging liquidations in Irish corporate history.
As a result of the liquidation of IBRC in February 2013 a number of payments were made from the Exchequer under various guarantees including the Eligible Liabilities Guarantee (‘ELG’) Scheme. These payments under the ELG scheme were owed to the Exchequer and stood as an unsecured credit in the liquidation of IBRC. Any remaining assets in IBRC, after the unwinding of all secured liabilities, were available for the benefit of the pool of unsecured creditors (including the Minister, due to payments under guarantees), unguaranteed bondholders, suppliers, and sundry liabilities. In total, Department of Finance related claims of c. €1.12 billion were submitted to the Joint Special Liquidators of IBRC.
Between 2016 – 2019, all admitted unsecured creditors of the liquidation, including the State, received 100% of the principal amount that they were owed at the date of the liquidation of IBRC in February 2013. The Special Liquidators continue to work through outstanding claims.
A further €108 million was received by the Exchequer in December 2019 which relates to the interest owed on the claims made by the Department of Finance.
On the commencement of the Anglo Irish Bank Corporation Act 2009, all shares in the Bank were transferred to the Minister for Finance and remained in the ownership of the Minister at the date of the liquidation of IBRC in February 2013. Included in this was £300 million of preference shares for which the State received €348 million in December 2019.
It is the current expectation of the Special Liquidators that they will have finalised the Special Liquidation of IBRC by end-2024, and as they work through the remaining tasks in the liquidation, including but not limited to the realisation of the remaining assets and the conclusion of the remaining legal cases that IBRC remain party to, there will be further funds returned to the State in 2023 and 2024.
As a result of the [external-link https://ec.europa.eu/eurostat/statistics-explained/index.php?title=European_system_of_national_and_regionalaccounts -_ESA_2010 | European System of National and Regional Accounts ] (ESA 2010), IBRC is classified in government. Any payment from the Special Liquidators of IBRC to the State would be considered an intra-government payment with no impact on the deficit. It would however improve the exchequer borrowing requirement as the cash received would increase the cash balances in the Central Fund and thereby reduce the required level of borrowing.
Among other assets, loans with a par value of €3.5 billion remain which the special liquidators continue to manage. These are loan assets which were not included in the original sales processes as they are connected to cases involved in ongoing litigation.
While the bulk of the liquidation proceeds have been realised, there remains a significant amount of work to be completed by the Special Liquidators including the on-going management of approximately 29 legal cases to which IBRC (in special liquidation) remains party.
The completion of the creditor adjudication process is another key task for the Special Liquidators. The Special Liquidators will continue to work with unsecured creditors who have submitted a claim but have yet to have their claim admitted.
COVID-19 will have a material impact on the timeline for completion of the liquidation. This is primarily as a result in of ongoing legal cases being significantly delayed, asset sales have also been deferred while it is still too early to have a clear view on the impact on the value of the remaining book.