State could recoup €8bn of €29bn Anglo bailout

The Irish Bank Resolution Corporation could potentially return €8bn to the taxpayer when it is eventually wound up, the bank’s chairman, Alan Dukes, told the Oireachtas finance committee.

The State pumped €29bn into Anglo Irish Bank in 2010 to plug the massive hole in its capital base following the transfer of a large chunk of its loan book to Nama. IBRC is responsible for winding down Anglo Irish Bank and Irish Nationwide Building Society. The Government had to commit €5.4bn to shoring up Irish Nationwide.

In 2011, IBRC’s management team gave guidance that eventual losses at the bank would reach €25bn. Furthermore, it transpired at the Oireachtas committee meeting that a €4bn capital buffer had been put in the promissory notes when they were designed.

If IBRC’s assumptions hold, the bank would be in a position to return €8bn to the Government when it ceases trading, said Mr Dukes.

Under a restructuring programme agreed with the European Commission, IBRC is scheduled to close in 2020. However, it could run down its operations before then, he added, saying: “We are ahead of our deleveraging targets.”

How quickly the bank offloads the rest of its loans will depend on the Irish and the UK property markets, he said. Mr Dukes predicted that the Irish market would dip further in 2013 before stabilising and making a marginal recovery by 2020.

IBRC had a net loan book of €15bn. Mr Dukes said this should be roughly €6bn-€7bn by the end of 2014.

It should also have exited the British market by the end of that year. However, the bank will be dealing with the more distressed part of its loan book over the latter part of its life, he said.

Mr Dukes was appearing before the committee with the bank’s chief executive Mike Aynsley, chief financial officer Jim Bradley, and head of specialised asset management Richard Woodhouse.

Social Party TD Joe Higgins challenged Mr Aynsley on his remuneration package. The CEO’s basic salary is €500,000 plus €128,000 per annum in pension payments and €38,000 in allowances. Mr Dukes said it was necessary to pay market rates to get the best personnel in order to maximise returns for the taxpayer.

The last time IBRC appeared at the finance committee, three months ago, there were still 22 executives from the time of nationalisation in 2009 on its 50-person management team. Sinn Féin TD Pearse Doherty wanted to know how many of those executives were still with the bank. Mr Dukes said he would update the committee as soon as he got that information.