Anglo payout ‘U-turn’ sparks uproar

Revelations that junior bondholders at Anglo Irish Bank, who are seeking pay-outs of up to €280m, could be given a "bonanza" windfall just as the first water charge bills hit hard-pressed families next spring have provoked uproar.

Speaking in the Dáil, Finance Minister Michael Noonan was accused of a U-turn after he admitted the Anglo payments could happen — despite previous insistence that this was “unlikely”.

With bondholders set to be rewarded just as the €275m-a-year water charge on domestic users is imposed, campaigners warned the Government had its priorities wrong.

The Right2Water movement said struggling households would be used to bail out bondholders again.

“Tens of billions have already been paid out and that is continuing,” a spokesperson said.

Fianna Fáil finance spokesman Michael McGrath said the minister could invoke special powers to prevent the payments as any money left over from the winding-up of Anglo and Nationwide, now known as IBRC, would be better used to cut water charges.

“The minister’s comments on junior bondholders can only be seen as U-turn, but the liquidisation is governed by special legislation so the minister has the power to issue a direction order to the special liquidator requiring that action be taken.

“The cost of Anglo to the Irish people has been somewhere in the region of €25bn, so if any money is left over, it should not be given as a bonanza to junior bondholders, but put back into people’s pockets and used to offset water charges,” Mr McGrath said.

Sinn Féin finance spokesman Pearse Doherty expressed concern at the possibility of massive windfalls for junior bondholders.

“The refusal by the minister to rule out payments to junior bondholders at IBRC next year is a far cry from what was suggested. Then we were told bondholders would not gain.

“The banks that make up IBRC, Anglo Irish and Irish Nationwide, cost the Irish people €35bn.

“Now we are told that next year, as water charges start arriving, bondholders may still be in line for a pay-out,” Mr Doherty said.

Mr Noonan said as liquidisation had gone “better than expected” there was a surplus which could now be used to cover some unsecured creditors.

Opposition parties accused Mr Noonan of back-tracking on a government statement in February 2013, that: “It is not expected that any assets will be available to repay subordinate bondholders,”

The minister told the Dáil yesterday that “was the expectation at the time”.

“Should the junior bondholders submit a claim and it be found to be valid, then they will legally be entitled to a dividend provided there are sufficient funds available” he said.

“Unsecured creditors will get paid if there is money, but there is a ranking order and it is not clear yet whether the €280m worth of junior bondholders will pursue their claims as creditors, whether they can validate their claims as creditors, and, if so, if there will be any money left over when other unsecured creditors are paid,” Mr Noonan said.

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