Saturday 3 December 2016

Deposit auction result is delayed until end of week

On-the-market EBS confirmed as one of the bidders vying for €14bn Anglo and Irish Nationwide book

Published 22/02/2011 | 05:00

THE result of the auction for Anglo Irish Bank and Irish Nationwide's deposit book won't be announced today, as originally hoped, but news will come "by the end of the week".

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The delay comes as sources yesterday confirmed on-the-market EBS was one of a group of more than four bidders vying for the €14bn deposit book.

The Government announced plans to auction the deposit pile two weeks ago, and told the court it hoped to have a result within "approximately two weeks".

It is understood there is no prospect of an announcement being made today, but bidders are expecting to learn the outcome of their offers by the end of the week.

Known bidders include Bank of Ireland, AIB and Irish Life & Permanent (IL&P). Sources confirmed that several other banks, including EBS, have also thrown their hats into the ring.

The EBS bid is understood to be supported by one of EBS's would-be buyers, a private equity consortium led by Cardinal, which is not allowed to bid for the deposits in its own right.

The building society's bid is believed to have gotten a cooler reception from its other potential owner, IL&P, which is bidding for the deposits in its own right.

Representatives for Cardinal and IL&P declined to comment, as did a spokesperson for EBS.

Complicated

The deposits auction is complicated because there are three crucial elements to every bid -- the percentage of the deposits they are willing to pay as a "purchase" fee; the assets they are willing to accept as backing for the deposits; and the volume of deposits they are willing to take on.

The National Treasury Management Agency (NTMA) ideally wants to sell off all the deposits in one chunk, but is also entertaining other offers.

At least one bidder -- IL&P -- is understood to want only a small portion of the deposits rather than the entire book.

The NTMA is also hoping that banks taking on the deposits will accept a corresponding volume of Nama bonds to back up the deposit book (since the deposits will be held as bank liabilities and must be backed up by assets).

Some bidders may demand that every €1 of deposits is backed by more than €1 of Nama bonds, since the Nama bonds are guaranteed by a weak sovereign (Ireland), while others may not be keen on Nama bonds at all.

The final element will be the percentage of the deposit book that the bidders are willing to "pay" to take on the deposits.

In court documents filed two weeks ago, the Department of Finance said the "external authorities" that supported Ireland's €80bn bailout were "pressing strenuously" for the transfer of Anglo and Nationwide's deposits to be "completed immediately".

It is understood that pushing out a decision until later this week will not pose any issue for those authorities, which include the ECB and the IMF.

Irish Independent

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