Wednesday 7 December 2016

Government forks out €230,000 for advice on sale of Irish Life division

Published 03/02/2012 | 05:00

THE Government has spent more than €230,000 in legal fees for advice on the aborted sale of Irish Life Assurance, but has not yet agreed how much it will pay Goldman Sachs for work on the almost-deal.

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The sizeable public bill for the €1.15bn deal, which came within a whisker of completion at the end of November, is in addition to the fees paid by state-owned Irish Life to its own advisers including Deutsche Bank. Of the fees disclosed so far, Arthur Cox got the lion's share with €188,670.13.

Matheson Ormsby Prentice got €44,871.67 for work on the same transaction.

Both firms were appointed by the National Treasury Management Agency (NTMA) following a competitive tender in March 2010, though their 2012 fees will be paid by the Department of Finance, which now has responsibility for the old NTMA banking unit.

Finance Minister Michael Noonan had previously revealed that Goldman were in line for payments of "up to €7.8m" for their work on capital raising and liability management exercises across Anglo, AIB, Bank of Ireland, Irish Life & Permanent, EBS and Irish Nationwide.

Fees

Responding to a parliamentary question from Sinn Fein's Pearse Doherty this week, Mr Noonan repeated the "up to €7.8m" figure. Some of the fees will be reimbursed by the banks involved.

His spokesman later told the Irish Independent that Goldman's total fees for the Irish Life work "have yet to be finalised" since "discussions are ongoing in relation to the sale of Irish Life".

Mr Noonan also stressed that the consultants employed by the banking unit had helped generate €5.6bn by getting junior bondholders to accept losses on some of their bank debt.

"As a result of this work, the State's cash outlay for the 2011 PCAR [stress test] bank recapitalisations was lower by €1.7bn than initially expected," Mr Noonan added.

It is understood that the consultants advised the Government to offer steeper discounts to the bondholders than those originally proposed by the Department of Finance team.

The future of Irish Life is back on the drawing board as the Government and the Troika battle to hammer out an agreement on the future of parent company Irish Life & Permanent.

The Government has until the end of June to increase the IL&P's capital by €1.3bn -- in theory most of this could be achieved by a sale of the life insurance unit, potentially to Canada Life Ireland, which came close to striking a deal back in November.

Sources close to the process believe a sale in such a short time-frame is unlikely, something that would make a further injection from the State a certainty.

Irish Independent

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