Bank to pressure wealthy to repay millions
Many of these loans were taken out between 2005 and 2007, which means they are due to be repaid.
However, many of the property funds are heavily in the red, which is set to put even more pressure on already highly indebted barristers, solicitors, accountants, doctors, and other high net worth individuals.
The stakes are high for barristers in particular, because if a member of this profession is declared bankrupt, in some cases they could be barred from practising.
During the last few years of the property boom the private banking arm of Anglo Irish Bank was very active in lending to such individuals. These loans were subsequently invested in highly geared property funds, also put together by Anglo.
Many of the loans were issued on six-year terms, which means many are now due for repayment.
What complicates matters further is that IBRC, which is responsible for winding down the operations of Anglo Irish Bank, is faced with managing the loan books put together by Anglo Private, as well as managing the property funds put together by the bank.
If IBRC was to sell these loan books, it would mean that many of these loans would be called in, which could wreak havoc across the high net worth sector.
However, sources say that because the prices for Irish assets are still distressed, there is very little incentive to sell loan books.
Instead, IBRC is believed to be working with clients on a case-by-case basis.
Sources claim that some of these wealthy individuals have been trying to put assets beyond the reach of the bank, which could result in a significant amount of litigation over the next few years.
Moreover, a growing number of clients are said to be taking action against IBRC on the basis of the advice given when the original loans were made.
A spokesperson for IBRC said it is not the bank’s policy to disclose the size of the loan book or any other details relating to Anglo Private. It is also not IBRC policy to discuss issues such as litigation or how it deals with clients on a case-by-case basis, said the spokesperson.
There were a number of private banks operating the same terms as Anglo Private during the boom years. Consequently, the Irish high net worth sector is exposed to hundreds of millions of euro in outstanding loans. This debt has to be worked through over the next number of years.
Business: BoI private equity fund remains ‘under water’
