Wednesday 29 March 2017

Bankers, lawyers and accountants got €33m for advice on crisis

Ciaran Byrne

THE Government paid an assortment of lawyers, accountants and international bankers €33m in fees for advice on bailing out our banks.

But the Department of Finance, which was responsible for €9.78m of the fees listed in the Comptroller & Auditor General's (C&AG) report, last night insisted the €33m costs had already been recouped.

"They have been more than covered by the fees paid by the banks to the Central Bank, Financial Regulator, Department of Finance and National Pension Reserve Fund Commission (NPRFC)," it said in a statement.

"The NPRFC received €30m in fees from both AIB and Bank of Ireland for the €3.5bn preference shares issued to each in 2009. Furthermore, under the recent Bank of Ireland transaction, the State, through the NPRFC, received €52m in fees for conducting this deal."

The department said the Central Bank/Financial Regulator had received fees of €6.8m to the end of 2009.

"The Department of Finance has received payments of €3.3m from the credit institutions covered by the original bank guarantee scheme to the end of 2009," it added.

Up to the end of July this year, the State had spent €24.3bn injecting money into the country's banks.

It is now standing behind €334bn of bank debts -- almost twice the size of the entire Irish economy, according to the C&AG's annual report.

Services

In addition to the cost of rescuing numerous banks such as Anglo, the Government wrote huge cheques in exchange for a range of services.

They included almost €10m to Dublin law firm Arthur Cox for advice to the Department of Finance, €7.33m to US bank Merrill Lynch for advising the National Treasury Management Agency and €4.95m to PricewaterhouseCoopers (PWC) for advising the Central Bank.

PWC also got €1.58m from the National Pension Reserve Fund, which also paid UK banker Sir Andrew Large €120,000 to help recruit financial regulator Matthew Elderfield and for other advice on general banking issues.

As well as paying PWC, the Central Bank paid more than €2m to KPMG, €840,000 to Jones Lang LaSalle, €420,000 to Deloitte and €240,000 to Ernst & Young.

The C&AG said administrative costs incurred by state agencies in relation to banking stabilisation measures have been "substantial in absolute terms but small relative to the scale of the costs", financial commitments and risks associated with the measures.

But in a warning to the Government, he added: "Access to timely and professional advice is a vital input to decision making in this context. At the same time it is important to ensure sound procurement and contracting practices are followed so that expenses incurred are no more than is warranted."

Irish Independent

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