Anglo Irish Bank debt deal gets ECB clearance

 

 Anglo Irish Bank, along with most of the Irish banking sector, collapsed after the 2008 financial crisis

 

The European Central Bank has cleared a deal to liquidate the former Anglo Irish Bank, the Republic of Ireland's Prime Minister has said.

"Today's outcome is a historic step on the road to economic recovery," Enda Kenny told the Irish parliament.
This follows emergency legislation last night and paves the way for a restructuring of Ireland's most controversial bank bailout.

Anglo Irish, now called IBRC, was nationalised in January 2009.
Under the plan, its debt will be transformed into a long-term bond.
The scheme is designed to ensure the repayments are reduced and spread over a longer period.
The debt had been costing Irish taxpayers 3.1bn euros each year.
The legislation went through parliament after details of negotiations between the Irish government and the ECB were leaked on Wednesday.

In a sitting running into the early hours of Thursday, politicians in the lower house of the Irish parliament voted through the legislation by 113 to 36.
Liquidation may enable Dublin to delay by several years the repayment of debts it took on to rescue Anglo Irish.

The vote came after a stormy session in which the plans were attacked for their swift timeframe and lack of detail.

The leader of the Socialist Party, Joe Higgins, said the introduction had been "chaotic".
The Republic of Ireland's central bank governor, Patrick Honohan, had been negotiating the plan with the European Central Bank (ECB) late on Wednesday.
Mr Kenny said the disappearance of Anglo Irish Bank and the Irish Nationwide Building Society, which is also held by IBRC, from the Irish financial landscape was "long overdue" and that without banking costs, Ireland's debt levels would now be below Germany's.
Toxic loan book IBRC's board was dismissed on Wednesday and the accountants KPMG are now running the bank.
Its loans will be transferred to the National Asset Management Agency (Nama), the Irish "bad bank" responsible for recovering the value of problematic loans made by other Irish banks.
A so-called promissory note, under which Dublin must pay 3.1bn euros (£2.7bn; $4.2bn) a year until 2023, would be turned into sovereign bonds that may not have to be fully repaid for up to 40 years.
The result would be that Dublin postpones repayment of a huge debt burden. The government had previously wanted to reschedule the debt repayment, but this was blocked by the ECB after 18 months of negotiations.

The ECB was reluctant to be seen to be providing debt relief to a national government.
The IBRC has been winding down the old toxic loan book of Anglo Irish for more than two years.
The Irish government issued the total 31bn-euro promissory note in order to cover most of the 34bn-euro cost of rescuing Anglo Irish.
The bank, which still employs almost 800 people, was among the most prolific of lenders to property speculators and developers during the Irish Republic's housing bubble in the last decade.
Liquidation would mean all these would lose their jobs, although the government said the majority of these are expected to be rehired by Nama.
 

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