Enda Kenny (Mayo, Fine Gael) | Oireachtas source

When Fine Gael and Labour formed a new Government in 2011, we promised to renegotiate the bailout programme inherited from the previous Government to secure a more affordable solution to our banking and sovereign debt crises. In particular, we committed to replacing short-term emergency Central Bank lending secured against the promissory notes used by the previous Government to bail out the worst Irish banks with longer-term, more affordable financing that reduces the burden on Irish taxpayers and reinforces growing confidence among potential investors in Ireland's economic recovery.

The promissory notes represent, in this Government's view, a highly onerous and unfair legacy of the banking crisis. Under this promissory note arrangement put in place by the previous Government, Irish taxpayers are due to pay €3.1 billion next March and every March until 2023, and declining payments until 2031, to cover the massive private losses of Anglo Irish Bank and Irish Nationwide.

Including interest costs, the lifetime cost of the promissory note would have been almost €48 billion. It is an enormous burden for taxpayers to bear just as we attempt to restore our public finances and investor confidence. As I have said many times previously, the Government is committed to replacing the promissory notes with a new cheaper, longer-term instrument that will ease the burden on the Irish taxpayer just as we are attempting to restore growth jobs and market financing to our economy.

A key element of the restructuring of the promissory notes is the liquidation of the Irish Bank Resolution Corporation, IBRC, the wind-down vehicle for the former Anglo Irish Bank and Irish Nationwide Building Society. As the Minister for Finance has confirmed, this Bill to liquidate the IBRC was approved by Government meeting earlier this evening as a first step in a final comprehensive restructuring of the heavy obligations placed upon the taxpayer from the bailout of these financial institutions. The liquidation is necessary to secure the billions of euro worth of IBRC assets that are ultimately owned by the taxpayer as part of that restructuring process.

The disappearance of the former Anglo Irish Bank and former Irish Nationwide Building Society from our financial, political and social landscape is long overdue. Both institutions became synonymous at home and abroad with the reckless mismanagement of our banking system and wider economy under the watch of previous Government. They became emblems of a culture of cronyism that undermined the confidence in both our economy and our political system. They became a stain on our international reputation and dent to our national pride.

Investigations by Mr. Peter Nyberg into the causes of our banking crisis revealed that both institutions has abandoned traditional checks and balances and risk management procedures in the pursuit of ever-bigger short-term profits. Both institutions are also key to understanding the wider crisis because they were both seen as highly profitable institutions to which other Irish banks should aspire. As other banks tried to match the profitability of Anglo Irish Bank in particular, their behaviour gradually became similar. Accordingly, when the crisis broke, large losses were realised not only in Anglo Irish Bank and Irish Nationwide Building Society, but also in other banks.

Both Anglo Irish Bank and Irish Nationwide Building Society also became synonymous with the disastrous response to the banking crisis by the previous Government and European authorities that brought our entire State close to bankruptcy. Instead of a fair sharing of the losses with the banks' creditors, the decision was taken to force the massive losses onto the shoulders of Irish taxpayers. This policy of socialising the costs of private failure was instigated by the previous Government and then, in effect, became a condition of the 2010 bailout programme required by Brussels and Frankfurt, where there was fear that a bank failure in Ireland would unleash panic in the financial markets across the eurozone. In any event, bond market financing for eurozone banks largely shut down anyway as the vicious circle between weak banks and weak sovereigns became entrenched. The belated recognition by European institutions that this policy was an expensive failure came too late for this country and for our people.

The bailout of private bank creditors cost Irish taxpayers, in total, an astonishing €64 billion, which is more than 40% of GDP or €35,000 for every household in the country - over ten times the cost of bank rescues in any other eurozone country. At €35 billion, the cost to date of the bailout of Anglo Irish Bank and Irish Nationwide Building Society remains, even to this day, shocking. This is the equivalent of almost €20,000 for every household in the country.

It is a burden that has weighed heavily on struggling families across the country. While not all of our public finance problems relate to the banking crisis, there is no doubt the hardship suffered by the Irish people has been worsened by the cost of bailing out Anglo Irish Bank and Irish Nationwide Building Society. Were it not for the bail-out of banks, Irish public debt levels would be now below those of Germany. This debt weighs heavily on the country as it seeks to re-enter the markets at sustainable interest rates.

Last June, the European Council resolved to break the vicious circle between the sovereign and banking debt crises in the eurozone and specifically committed to examine the situation of the Irish financial sector with a view to further improving the sustainability of the well-performing adjustment programme. Eurozone leaders, including Chancellor Merkel and President Hollande, have publicly recognised the unique circumstances behind Ireland's sovereign debt crisis. For the credibility of the entire eurozone, we now need to see concrete steps to give effect to that commitment. The ECB is the first of the European institutions to have an opportunity to show its commitment to getting Ireland back to full financial market access this year.

Restructuring these promissory notes will lead to a significant reduction in Ireland's market funding requirements until its financial stability is fully restored, boosting investor confidence and economic recovery. It will also reinforce public and market confidence in the Government's commitment to the path of fiscal consolidation and structural reform. While few in this country will grieve the loss of these financial institutions, many will feel for the hundreds of ordinary staff, and their families, affected by this decision, about which the Minister for Finance has already spoken. I expect that many of these staff will be re-employed as part of the managed liquidation of the bank over the coming months. Others may be employed by the National Asset Management Agency as part of the redistribution of some of the assets of the IBRC.

Today's agreement is a significant milestone. It closes a sad and tragic chapter in our economic and political history. We are now a poorer but, perhaps, wiser people from the lessons we have learned. Let there be no doubt, this is not a silver bullet to end all our economic problems. The damage done by these financial institutions will take many years to rectify. After the catastrophic economic management of the past decade, so epitomised by Anglo Irish Bank, there is a long and hard road to travel in our country's journey back to prosperity and full employment. Today's decision to liquidate the IBRC is another step in the right direction.

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