Early wind up means IBRC creditors repaid €3bn less

The IBRC — comprising former Anglo Irish Bank and Irish Nationwide — will have €3bn less to repay creditors after the Government sped up its liquidation, two sources said on condition of anonymity.

Finance Minister Michael Noonan’s February decision to wind up IBRC in 2013, seven years earlier than planned, will force the bank to forgo funds the Government had pledged in 2010 as part of the bailout, said the sources, who asked not to be identified.

That will leave IBRC with less cash to pay unsecured bondholders and litigants unless the Government puts more money into the company. Among the losers are as many as 120 litigants suing the bank and 16 customer-owned lenders which bought an equity-linked bond from Anglo’s private bank. Mr Noonan said last month it’s still too early to put a value on Anglo Irish’s remaining assets.

“There’s less meat on the carcass of the dead bank for creditors to share than they might have thought,” Lorcan Roche Kelly, chief Europe strategist at Trend Macolytics LLC, said in a telephone interview from Sixmilebridge, Co Clare.

There’s “no prospect” of the Government injecting more funds to make up the shortfall, he said.

Paul McSharry, a spokesman for IBRC’s liquidators, Kieran Wallace and Eamonn Richardson of KPMG in Dublin, and officials at the finance ministry declined to comment.

The Government said earlier this year it will liquidate IBRC and replace the notes, due to expire in 10 years, with bonds with maturities of as long as 40 years to cut the near-term cost of Anglo’s bailout. On the day of the liquidation, Anglo Irish classed the promissory notes as a €28bn asset, while the Government and Central Bank recorded them as a €25bn liability, the sources said. The difference arose from how the bank accounted for the Government’s two-year interest holiday. The bank will have to write off the €3bn difference this year.

Unsecured creditors are at the back of the queue to recover their money from the liquidation, the finance ministry said in February. Litigants whose lawsuits against the lender succeed will also rank as unsecured creditors, Noonan has said.

IBRC had €169m of unsecured debt outstanding at the end of June 2012, according to a company filing. About €33m of it was redeemed at face value last year.