IBRC has to wait on promissory notes deal

The Irish Bank Resolution Corporation will only know what the implications of a restructuring of the €29bn in promissory notes will have on the bank when the deal is finalised, chief executive Mike Aynsley told the Oireachtas Finance Committee yesterday.

But the IBRC has provided models based on different restructuring assumptions to the Government and the ECB, both of which are currently in negotiations on the highly sensitive issue of promissory notes.

The Government issued €29bn in promissory notes in 2010 to cover losses in Anglo Irish Bank.

The Government is scheduled to pay €3.1bn to IBRC every March until 2020, but is looking to have the maturity of the promissory notes rolled out to 40 years.

IBRC chairman Alan Dukes said it was not possible to comment on the impact a restructuring would have until it is presented with the details.

However, he said it was important that the bank’s capital base is preserved so that it can run down the legacy assets of Anglo Irish Bank and Irish Nationwide.

IBRC’s management team was before the finance committee to give an update on its performance.

Fianna Fáil’s Michael McGrath sought assurances from Mr Aynsley that IBRC was not adopting the bad practices that existed at Anglo Irish when the bank had relationships that were not sufficiently at arm’s length with its customers.

During the British High Court case between the property developer Paddy McKillen and the Barclay brothers over the ownership of London luxury hotels, it emerged that Mr Aynsley had sent a text to Mr McKillen disclosing confidential details of an IBRC board meeting.

The board had agreed to work consensually with Mr McKillen.

Mr Aynsley said it was necessary to get the information to Mr McKillen, but the latter did not receive emails.

Mr Dukes said there were proper controls and procedures in place throughout all levels of the bank.

IBRC has €11bn in provisions set aside for impaired loans of €18bn, which is 66% of its total loanbook. Roughly 100 customers account for loans of €5bn. A further 2,000 clients, mostly in commercial real estate loans, account for a further €7bnm and thousands of customers with loans of €10m or less made up the balance.

IBRC is a direct landlord to 100 businesses.

Ciaran Lynch, chairman of the finance committee, asked if the bank had negotiated rent reductions with clients to make their businesses more sustainable.

Mr Dukes said the bank deals with clients on a case-by-case basis but its objective was to maximise returns for taxpayers.

The bank has inherited “an extremely challenged” mortgage book from Irish Nationwide. Mr Aynsley said IBRC is using Mars [mortgage arrears resolution strategy] and will use the forthcoming personal insolvency legislation to deal with arrears cases for the 14,000 mortgage holders.

Neither the Garda Fraud Squad nor the Office of the Director of Corporate Enforcement has so far pressed charges against former Irish Nationwide chief executive Michael Fingleton or any of the building society’s senior executives.