Anglo bailout restructure savings face new limit
Published 14/10/2011 | 05:00
THE maximum benefits to the State from restructuring Anglo Irish Bank's bailout is €12bn - even though the interest bill is €17bn.
This is because €5.2bn goes back to the State under the existing arrangements, the Irish Independent has learned.
The news comes as executives from Anglo continue to crunch the numbers on options to restructure the bailout without adversely impacting the bank's capital position.
Finance Minister Michael Noonan is pushing Europe to allow a restructuring of the €30bn "IOU" or promissory note that was created by the State to bail out Anglo and Irish Nationwide. The terms of the IOU mean the State must pay the banks about €3bn until 2023, and lower amounts until 2031.
The total bill comes to €47.4bn because the State must pay interest at a rate of 5.8pc on the IOUs outstanding.
The Irish Independent has learned, however, that while the interest bill under the current arrangement would come to a problematic €17.4bn, more than €5.2bn of this would actually go back to the State.
This is because Anglo takes its IOUs to the Central Bank of Ireland and exchanges them for liquidity, or cash.
The Central Bank of Ireland charges a rate of 3.5pc for this, including a 1.5pc fee for the ECB and a 2pc fee for the Central Bank of Ireland.
The Irish portion of the fee is ultimately transferred to the Exchequer. Figures show that the Central Bank of Ireland would make €5.22bn from lending against the IOUs until 2031.
The Department of Finance declined to comment on the figures last night, or on when Anglo was expected to report back on its investigations into the logistics of any restructuring.
l Meanwhile AIB has appointed Simon Ball and Thomas Wacker as non-executive directors. Mr Ball is non-executive deputy chairman and senior independent director of Cable & Wireless, and a non-executive director of Tribal Group. Mr Wacker is a non-executive director and former chief executive officer of Belmont Advisors (UK).