Written answers

Wednesday, 10 November 2010

Department of Finance

Company Administration

9:00 pm

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
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Question 98: To ask the Minister for Finance the progress of the restructuring of Quinn Group; the level of losses incurred by Anglo Irish Bank to date on loans to Quinn Group; and if he will make a statement on the matter. [41640/10]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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On 3 June the High Court granted the Joint Administrators permission to appoint advisors on any prospective sale of Quinn Insurance Ltd (QIL). The advisors, on behalf of the Joint Administrators, issued an information memorandum on 27 August on the sale of the company to interested parties which set out a two stage process for selecting a purchaser. The first stage required the submission of a non-binding indicative proposal by Friday 17 September. I understand that following evaluation by the advisors and the Joint Administrators of the above mentioned proposals, a limited number of prospective purchasers have been shortlisted by the Administrator to participate in Phase II of the sale process. They are conducting further due diligence including the consideration of the necessary commercial information underlying the company to enable them make a final bid. I understand that the Administrator wants to conclude a sale transaction by the end of the year.

On the question of the level of losses incurred by Anglo Irish Bank to date on loans to the Quinn Group, I should state at the outset that the relationship between Anglo and the Quinn Group is a commercial one. Under the Relationship Framework put in place under the Anglo Irish Corporation, Act 2009, which governs the relationship between the bank and its shareholder the State, issues relating to the commercial activities at the bank are a matter for the board in respect of which as Minister for Finance I have no role in day to day management decisions.

It has been well publicised that the bank has a large exposure to the Quinn Group. Consequently the losses the bank might make depend to a large degree on future developments in the company and commercial decisions it makes in managing its commercial relationship with the company and any restructuring of the lending that may take place.

In addition, the taking of impairments on loans by Anglo and the timing of these decisions is a commercial matter for the bank. As you will appreciate, in my role as Minister for Finance and consistent with the terms of the Relationship Framework, I have no input into such decisions which are a matter for the management and board of Anglo on the basis of advice of their auditors in line with international accounting standards.

In summary, therefore there are a number of commercial options open to Anglo management which could result in a variety of outcomes, making any accurate estimate of ultimate loan losses very difficult at this stage and subject to very significant uncertainties. However, I would expect Anglo to keep me informed of any significant developments which would affect their capital position including any impact, should it materialise, from its exposure to the Quinn Group.

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