Gerry Adams (Louth, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

155. To ask the Minister for Finance if he intends to lay before Dáil Éireann the total euro nominal differential between the valuation of the Irish Bank Resolution Corporation loans net of capital provisions in December 2012 and the total independent market valuation of the loans once completed by the appointed independent loan valuers of the liquidated IBRC [19869/13]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I have been advised by the Special Liquidators that they are not in a position to provide this confidential commercially sensitive information as this could potentially have a detrimental impact on asset recovery. I am further advised that in order to ensure that maximum value is obtained in the sales process the independent valuations will remain confidential. As explained in the Q&A document published by my Department on 7th February last if, after an independent valuation exercise, the value of the assets sold by the Special Liquidators is not sufficient to compensate NAMA for the amount it paid for the net IBRC debt owed to the Central Bank, I will be required to reimburse NAMA for the shortfall. The final valuation of these assets will not be known until that sale process is completed. I will make appropriate disclosure to the House at that time.

Gerry Adams (Louth, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

156. To ask the Minister for Finance if he has considered instructing the special liquidator of Irish Bank Resolution Corporation that the disposal of semi-State owned IBRC assets be managed under the same protocol that is in place for the sale of Bord Gáis Eireann’s Energy business, ESB’s non-strategic power generation capacity, some assets of Coillte and the sale of the State’s remaining shareholding in Aer Lingus; if he has discussed with the Department of Public Expenditure and Reform the imposition of this protocol on the sale of IBRC assets which are nominally valued at over three times the value of the total semi-State assets that are being sold under this semi-State sale process; and if he will make a statement on the matter. [19871/13]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The liquidation of IBRC is similar to any other liquidation with the exception that the Special Liquidators have been appointed by the Minister under the Irish Bank Resolution Corporation Act 2013 rather than appointed by the Courts. As such the Special Liquidators are obliged to follow normal Companies Acts priorities throughout the liquidation process and act in a manner that ensures the assets of IBRC are managed in a way which maximises the overall return for all its creditors including the State subject to the provisions of the IBRC Act. While the matter was not formally discussed with the Department of Public Expenditure and Reform, it was not considered appropriate for the same protocol which is in place for semi-State assets to apply to the disposal of the IBRC assets as the Special Liquidator will only be holding the assets for a short period of time, the sale of those assets is guided in a specified manner and the State is a creditor of IBRC in the context of the liquidation as opposed to an owner of the assets.

As the Deputy is aware, the Special Liquidators are in the process of devising and implementing a valuation and sales process in respect of the assets of IBRC. Any assets that are not sold to third parties for a value higher than the independent valuations will be sold to NAMA at that price. Assets that are transferred to NAMA will be subject to the protocol according to the NAMA Act 2009.

Gerry Adams (Louth, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

157. To ask the Minister for Finance further to Parliamentary Question No. 254 of 19 of February 2013, if he will provide further detail and greater clarification as to what he meant by a no gain/no loss basis on the transaction; if he will confirm that this statement in effect means that the liquidation of Irish Bank Resolution Corporation resulted in the European Central Bank finance lent by the Central Bank of Ireland to Bank of Ireland on foot of the Irish government bond issued to IBRC becoming permanently retained in Bank of Ireland’s balance sheet and that the Central Bank of Ireland retained ownership of the then Bank of Ireland pledged collateral; if he will confirm whether the finance that was provided from the Central Bank of Ireland to Bank of Ireland on the Government bond issued to IBRC and retained by Bank of Ireland as part of a repurchase agreement with IBRC was exceptional liquidity assistance or whether it was finance provider under the ordinary open market operations of the ECB; if he will explain in granular detail the reason the IBRC liquidation caused the Central Bank of Ireland to retain ownership of collateral that at the time of the liquidation was not owned by IBRC; and if he will make a statement on the matter. [19872/13]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As the deputy is aware, there were two separate but related repurchase agreements in place at the time of IBRC’s liquidation concerning the 2025 Irish Government Bonds; one between IBRC and Bank of Ireland (“the IBRC repo”) and another between Bank of Ireland and the Central Bank of Ireland as part of normal Eurosystem refinancing operations. Under these repurchase agreements the 2025 Government Bonds were pledged as collateral by IBRC to Bank of Ireland (under the IBRC repo), and further by Bank of Ireland to the CBI (under the normal Eurosystem refinancing operations) in return for cash which was provided from the Eurosystem to Bank of Ireland and further from Bank of Ireland to IBRC (under the IBRC repo). As a result, at the time of the IBRC liquidation, the CBI held the 2025 Irish Government Bonds as collateral on behalf of the Eurosystem and IBRC held the cash proceeds of the repurchase agreement between it and BOI. The Bank of Ireland held neither bonds nor cash, but rather obligations for payment of cash and receipt of bonds with IBRC and offsetting obligations with the CBI. The liquidation of IBRC constituted an event of default under the IBRC repo with BOI. As a result, IBRC was obligated to repurchase the bonds from the Bank of Ireland at a repurchase price governed by the IBRC repo. As IBRC was unable to repurchase these bonds from Bank of Ireland with cash, Bank of Ireland retained the 2025 Irish Government Bonds in fulfilment of IBRC’s obligations under IBRC repo. In effect, the 2025 Irish Government Bonds, held as collateral by the Bank of Ireland under IBRC repo, were retained by Bank of Ireland in lieu of IBRC repurchasing these bonds with cash.

After the 2025 Government bond repo agreement between IBRC and Bank of Ireland terminated, the CBI purchased the bond. This bond was placed in the trading portfolio of the Central Bank, along with the bonds acquired in exchange for the Promissory Notes, and these bonds will be sold as soon as possible, provided conditions of financial stability permit.

To specifically respond to the points raised in your question, I am informed by the Bank of Ireland that, as a consequence of the termination of the IBRC repo and subsequent sale of the bonds to the CBI, the Bank of Ireland did not incur a gain or loss on these transactions.

In addition, the funding provided to Bank of Ireland by the Eurosystem through the repo with CBI was further provided by Bank of Ireland to IBRC under the IBRC repo. IBRC’s non-payment of that funding back to Bank of Ireland upon default on the IBRC repo did not result in financing being retained by Bank of Ireland, as this financing had been passed to IBRC under the IBRC repo and was not repaid to Bank of Ireland upon the termination of the IBRC repo.

Finally, the financing provided to Bank of Ireland by the Eurosystem under the repo through the CBI was provided under ordinary open market operations.