The €31bn promise
Finance Minister Michael Noonan was forced last night to liquidate the Irish Banking Resolution Corporation with legislation that was voted on in the Dáil in the early hours of this morning.
Mr Noonan said he would have preferred to introduce a bill giving effect to the liquidation “in tandem” with an announcement on a promissory note deal.
But he said there was an “immediate risk” to the bank because information on a proposal the Government had put to the ECB was leaked to Bloomberg.
Mr Noonan said the ECB will continue to consider its proposal today, which is believed to involve replacing the State’s existing €31bn promissory note by long-term government bonds.
He said work is ongoing to reach an agreement that is “satisfactory to all sides: the Irish State, the European Central Bank and the eurozone”.
Get out on the Streets this Saturday Feb 9th:IBRC Bill pins Anglo Debts on back of Irish people http://t.co/2zPTzGiN #promnight #anglo #feb9
— Richard Boyd Barrett (@RBoydBarrett) February 7, 2013
While the deal will ease the pressure on the Government in the short term, it will not reduce the overall debt burden.
Instead, the €31bn in promissory notes will be wrapped up into a long-term bond with a maturity date of up to 40 years.
Opposition politicians criticised the deal on the basis that the promissory notes now become part of the sovereign debt and goes straight onto the Government’s balance sheet.
The deal is expected to be announced today, following a night of chaotic scenes in the Dáil and a late evening cabinet meeting.
The Government’s attempts to introduce the legislation at 11pm were met with fierce resistance from the opposition, who said they had no time to read it.
Labour party getting frisky.Frivolity late at night not funny in dark circumstances.Bad Bill for Ireland.Second part of package not revealed
— Shane Ross (@Ross_Shane1) February 7, 2013
Fianna Fáil leader Micheál Martin said members could not be asked to vote on a bill they had not seen. He said the opposition finance spokespersons had just seen it 10 minutes before Mr Noonan came into the House.
The Taoiseach offered to adjourn the House until midnight, when Mr Noonan finally laid the bill before the House. “In the discussions with the ECB, it was envisaged that the first step would be the liquidation of IBRC and the sale of its remaining assets to Nama or other market purchasers,” he said.
“As soon as the information relating to the proposal to liquidate IBRC was made public, there was an immediate risk to the bank. Given this position I, as minister for finance, took immediate action to secure the stability of the bank and the value of its assets, valued at €12bn, on behalf of the State,” he said.
Ming: This legislation will destroy this country. It’s a long road without a turn. #anglo #promnight #ibrc
— breakingnews.ie (@breakingnewsie) February 7, 2013
Mr Noonan expressed his regret for the “shock” caused to the 800 staff in IBRC whose contracts will be terminated. But he said they will be rehired to assist with the liquidation.
President Michael D Higgins cut short a trip to Italy and flew home to be on standby if needed to consider the legislation.
The infamous Anglo-Irish Bank aka the IBRC is about to be liquidated in the Dail tonight-- the end of a banking era Thank God!
— Joe Costello (@JoeCostelloIE) February 7, 2013
Government sources said the plan, if accepted by the ECB, would be “very advantageous to Ireland”.
Fianna Fáil spokesman Michael McGrath said he was willing to accept “in good faith” Mr Noonan’s claim that emergency legislation is needed to protect IBRC’s assets. He said his party has no objection in principle to the winding up of IBRC but he did have issue with the way in which the Government had put forward the legislation.
'You may be winding up Anglo but not its debt. Sinn Fein does not accept that paying this debt over a longer period, is a credible deal.'
— Gerry Adams (@GerryAdamsSF) February 7, 2013
