Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I am glad to have the opportunity to speak on the Irish Banking Resolution Corporation Bill 2013. At the outset, I wish to register a protest and to state Fianna Fáil's objection in the strongest possible terms to the manner in which this matter has been handled. Leaks came out during the day that moves were afoot at the European Central Bank, ECB, with regard to the overall deal on the promissory note and parts of those leaks referred to the winding-up of the IBRC. It is clear from the Minister's statement that the Government has had this issue on the agenda for some time as part of its negotiations with the ECB. That matter presumably was not meant to come into the public domain today and the Minister has now told Members that unless they adopt this Bill immediately, it poses an immediate risk to the bank. The Minister has informed Members of the need to take immediate action to secure the stability of the bank and the value of its assets, which are valued at €12 billion, on behalf of the State. I would have liked the Minister to have gone into much greater detail as to what are those risks because I am sure everyone in this House will agree this is no way to conduct our business. It is clear the Minister plans to appoint a special liquidator early tomorrow morning in an effort to fireproof the bank from claims by others who may wish to prevent the appointment of a liquidator to protect their own commercial vested interests. I assume this is the essence of the argument with which the Minister has come forward tonight. However, I would have expected the Minister to have justified this in far more detail in respect of what precisely are the risks because it is now in the public realm - and has been for most of the day - that the Government intends to liquidate the IBRC. I have not received an adequate explanation from the Minister as to the reason this cannot be done in the normal course of business in this House. Clearly, the Minister's attention was to announce the winding-up of the IBRC as part of the overall package the Government hoped to agree with the ECB but for one reason or another, he has been forced to bring forward all of that.

Unfortunately, leaks have been a common feature of developments in recent weeks.

We may never know who leaked this information today. Whoever leaked it first was quickly pursued and succeeded by many others who gave far greater details of what may emerge tomorrow in respect of the overall deal. I sincerely hope nothing that has been said in recent days or weeks by senior Government people, nothing that has been leaked, has in any way jeopardised the best interests of this State. When I speak on behalf of Fianna Fáil, that is my sole motivation in responding to this legislation.

This legislation has to be seen in context, namely, a proposal the Minister has put through Governor Honohan to the governing council of the ECB and which, it is hoped, will be adopted tomorrow. We do not know what is in that proposal, with the exception of leaks that have been reported in the media, and we cannot be sure of their veracity.

We should be honest with people and acknowledge that this is not a liquidation of IBRC in the true sense of the word because many people all over the country would rejoice in the notion of IBRC being obliterated and taken off the banking landscape with immediate effect. Of course, that is not the true effect of what the Minister is proposing. This is a technical liquidation of IBRC which will involve, for example, all the assets of IBRC being transferred to NAMA, and they will be worked out in the fullness of time in the normal course of business. A normal liquidation, as the Minister well knows - we have seen far too many of them in the last number of years - involves a liquidator being appointed, all the assets being realised immediately involving the fire sale all assets and whatever is left the creditors get in order of the hierarchy set out in the companies Acts. That is not what is being proposed. IBRC will live on in a different form by virtue of the assets being transferred to NAMA.

I want the Minister to give a number of reassurances to the House. He has not given them adequately on Second Stage. This Bill presents fundamental questions that need to be answered adequately before the House decides on the legislation. It is potentially a legal minefield. IBRC is involved in a plethora of cases, as the Minister knows, involving, for example, bondholders whom the bank has sought to burn, and there is a case outside this jurisdiction in respect of that matter. Many other individuals, companies and groups have a gripe with IBRC. We all know that the best legal brains in this country and further afield are going to be pouring over every single word, dot and comma in this legislation to see if it can in any way confer an advantage on their clients. I assume that, as with any other legislation, this Bill has been constitutionally proofed. There are provisions in it about which I have serious concerns, including in the Title to a Bill which refers to permanent or temporary interference with rights including property rights of persons.

The Minister is asking us to take a leap of faith that all of these issues have been adequately examined, analysed and that sufficient safeguards have been put in place to protect the national interest, which is our concern in debating this Bill.

Given the Government has signalled that it intends to wind up IBRC, the Minister is presenting us with an argument that not doing so immediately would expose the bank to very serious risk. That may or may not be the case. I want the Minister to go into further detail in relation to that. I also want the Minister to explain what the benefits are of winding up IBRC immediately, lodging the promissory note presumably with the Central Bank and transferring the assets to NAMA. It is only a few months since the Minister gave a reply in this House stating that in his view "NAMA and IBRC are not in direct competition. Due to funding and operation considerations, it is not considered appropriate to merge the two agencies at this time." That was last September. Six months on, clearly circumstances have changed.

The Minister must explain precisely what are the implications of the change in Government policy whereby it is proposed to immediately liquidate IBRC and transfer its assets to another State agency, the National Asset Management Agency. He must spell out the implications for taxpayers, ignoring the overall deal about which, as I stated, we are completely in the dark.

The remaining creditors of IBRC, the bondholders, are now small in number and the value of their bonds has greatly diminished because they have been substantially repaid. Will the Minister spell out what are the implications for the remaining unguaranteed bondholders in IBRC? Does the Bill involve burden sharing with the remaining creditors? This is an important question to which people deserve to have an answer.

The current chief executive officer of IBRC, Mike Aynsley, and its chairperson, Alan Dukes, have appeared before the Joint Committee on Finance and Public Service on a number of occasions. They estimate that the likely cost of winding up IBRC would be in the region of €25 billion. Will the Minister explain what are the consequences of what he is proposing in respect of the final bill to the taxpayer of bailing out IBRC in the context of this legislation? The House deserves to have important and essential information on that matter.

There is precious little sympathy for staff who work in banks, which is very unfair because the majority of them had nothing to do with the crisis that emerged in the banking system as a result of the reckless management of the banks by a relatively small number of people at senior levels across the banking sector. I am concerned about the provisions of the Bill in respect of the staff of IBRC because the legal effect of the appointment of a special liquidator is that their employment will be terminated immediately as a direct consequence. The Minister addressed this issue when he indicated that the majority of staff will be rehired, presumably by the National Asset Management Agency, for the purposes of the orderly liquidation on such terms as the special liquidator designates.

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