Friday 21 October 2016

Central Bank planning €1.7bn payment to State

Dara Doyle

Published 23/04/2016 | 02:30

The Central Bank has earmarked about €1.7bn for payment to the Government, sources said last night. It represents the State's share of the Central Bank's annual surplus or profit and is in line with last year. The bank is due to publish its annual report on Wednesday, after the document is formally placed before the Oireachtas on Tuesday.

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Central banks normally make money by lending to commercial banks, but this year's annual report will be closely read for details of bonds it holds linked to the liquidation of the former Anglo Irish Bank.

The controversial bonds - owed by taxpayers - replaced the notorious Anglo Irish bank promissory note. The Central Bank is under pressure from the ECB to sell the bonds, but when it does it destroys the cash raised while taxpayers must continue to pay interest to the new owners.

Finance Minister Michael Noonan said this month that Central Bank sales are ahead of the minimum schedule laid out when the lender was liquidated.

The Central Bank's stock of the bonds is now €22bn, Mr Noonan said this month.

In 2014, holdings of the notes declined to €24.5bn the Central Bank said in its last annual report.

In response to a parliamentary question from Fianna Fáil finance spokesman Michael McGrath in February, Mr Noonan said interest income paid by the Irish Government on the bonds contributed €817.1m in 2013 and €859.4m in 2014 to the Central Bank's profits. Ultimately much of what was paid out by the Exchequer in interest on bonds was re-couped through the Central Bank. That's expected to drop to €669.9m for 2015. (Bloomberg)

Irish Independent

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