© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
June 8, 2014 3:03 pm
Anglo Irish Bank, the institution that brought Ireland’s financial sector crashing down in 2008, has been “finally consigned to history” as liquidators prepare to sell the last of its assets and repay its outstanding debt, according to the country’s finance minister.
Michael Noonan’s comment came as Standard & Poor’s, the rating agency, on Friday raised its long-term rating on Ireland to A minus from BBB plus, citing “brightening prospects” for the Irish economy.
S&P lifted its estimate of economic growth to 2.7 per cent a year for 2014-16, from 2 per cent, and said there was a one-in-three possibility of another upgrade in the next two years. Before the global financial crisis Ireland had a triple A rating, which it lost in 2009.
Mr Noonan said the progress of the liquidation – the biggest in Ireland – was a significant factor in the country’s emergence in December from its €67.5bn international bailout, which led to a sharp fall in Irish borrowing costs.
The bailout was required after Anglo and most other Irish banks fell victim to the bursting of a speculative property price bubble.
KPMG, Anglo’s “special liquidator”, issued a progress report on the liquidation on Friday showing that the bank, now known as Irish Bank Resolution Corp, repaid the bulk of a €13bn loan advanced to facilitate the process, which began in February last year. The outstanding €2bn is expected to be repaid later this year, which will effectively mean that the process has been completed.
Ireland’s taxpayers poured €64bn into the country’s financial institutions as they were buckling under the weight of bad debts during the global financial crisis. Some €34bn of that was sucked in by Anglo. Taxpayers are still owed a huge sum, but it is likely never to be recovered once the liquidation has been completed.
Much of Anglo’s attempted rescue was funded by promissory notes, which have since been restructured. Mr Noonan said Ireland would need to borrow €20bn less over the next 10 years because of the cash flow implications of the restructuring than if the notes had been left untouched.
The liquidation “has drawn a line once and for all under the cost to the Irish taxpayer of Anglo Irish Bank”, he said. Anglo and Irish Nationwide, another bankrupt lender, were now “finally consigned to history”.
Anglo’s legacy continues to reverberate, however. Sean FitzPatrick, its former chairman, was acquitted earlier this year of making illegal loans to investors to prop up the bank’s share price in 2008. David Drumm, former chief executive, is meanwhile seeking to be declared bankrupt in the US in a move opposed by IBRC. A court in Boston is expected to rule on the issue in the summer.
The progress report shows that the liquidation, which involves assets in 22 jurisdictions, is proving lucrative for professional services firms. KPMG earned over €48m between February 2013 and March 31 this year before agreeing a €5m rebate with the government.
A & L Goodbody, one of Dublin’s leading law firms, earned €25m and agreed a rebate of €2.5m; while the London firm Linklaters earned €16m before a rebate of €100,000.
Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.