Bank sees itself as a saviour but locals say Anglo is root of all evil
DETAILS of the military precision used to plan Anglo's swoop on the Quinn Group are going down like a lead balloon in the locality, but then it doesn't take much to trigger anti-Anglo sentiment in Sean Quinn's heartland these days.
Listening to some locals, Anglo (or alternately, financial regulation boss Matthew Elderfield) is the root of all evil and the root of all the woes in the Quinn Group and Quinn Insurance Limited (QIL).
The elephant in the room, though, is how would things have panned out if Anglo and the Central Bank hadn't stepped in? And would the Quinn businesses have been strong enough to withstand the financial storm and keep their thousands of employees in jobs?
Locals say the Quinn businesses would have been just fine. The manufacturing group is turning pre-tax profits of about €100m a year. And the insurance company has been spectacularly profitable and is being dragged down by unreasonable assumptions about the cost of future claims. Anglo, though, sees itself as the Quinn businesses' saviour rather than the aggressor that's perceived in the locality.
While the Quinn manufacturing companies are running a pre-tax profit, the Quinn Group has a €1.34bn debt pile "which, quite simply, the group could not service", according to chairman Pat O'Neill.
The restructuring deal agreed as part of the Anglo takeover sees manufacturing business "permanently relieved" of €500m of debt giving the "necessary financial stability" for the group to grow.
"There will be no job losses from or related to this restructuring and it will help to protect jobs," Mr O'Neill added in his statement attached to the Quinn Group's recently filed accounts. Could the Quinn Group have given the same commitment under its original ownership structure?
The restructuring has also gotten the manufacturing company a five-year financing deal, something most companies would bite their right hand off for in the current environment.
Crucially, Anglo insists there are no plans to sell any business or close any plants -- something some fear could have happened if the group had been auctioned off to pay down debt.
That sell-off is the only obvious alternative to the current deal, if you accept the contention that the Quinn Group's debt was unmanageable. Would that have panned out better than a takeover by Anglo and the bondholders?
Over at Quinn Insurance, the arguments about the adequacy of reserves are pretty technical, but the simple point remains -- if you don't satisfy the regulator on your reserves, then you don't get to sell insurance here.
A Quinn family-owned Quinn Insurance didn't satisfy the regulator and has yet to try to convince a court that the regulator's demands were unreasonable.
In that context, a change of ownership was necessary for the company to continue trading.
The Anglo/Liberty deal may be unpopular, but would it have been better if the Cavan insurer had been bought by any of Zurich or Travellers, which have sizable operations here already?