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Monday 25 September 2017

'It's nothing personal, we are just getting the people's money back'

The man faced with cleaning up the mess that was Anglo says there is no vendetta, writes Ronald Quinlan

Ronald Quinlan

Ronald Quinlan

IF there's one event that stood out in 2011 for Mike Aynsley, it was the day the Anglo Irish Bank signs came down across the country,

"When that happened, I think people realised that we were pretty serious about changing the way things have been, changing the perception that we were still an organisation like the old Anglo. We're very serious about transforming the Irish Bank Resolution Corporation (IBRC) into a recovery vehicle that works for the taxpayer," Aynsley says when asked to outline what he and his team have achieved in the last year.

Such is his relaxed nature, it is hard to imagine the 53-year-old Australian getting too worked up about anything that he faces as he goes about cleaning up the mess left behind by his predecessors, David Drumm and Sean FitzPatrick.

But even if he does get worked up, it isn't because he's taking any of it personally. Indeed, even the mention of Ireland's one-time richest man, Sean Quinn, and his repeated allegation that the IBRC has been pursuing a vendetta against him elicits what can only be described as a firm, but entirely reasonable response from Mr Aynsley. It will certainly seem reasonable to taxpayers now groaning under the increasing burden of cuts and taxes necessitated by the boom-era antics of Anglo Irish Bank.

"What you have here is a very complex situation. You had a broken insurance company and a stressed manufacturing group and diverse property portfolio in multiple jurisdictions, but at the end of the day all that is financed with large chunks of money from the bank. Unfortunately, Mr Quinn decided that he wanted to gamble and he's lost his shirt and we're saying we want our money back. It's nothing personal. We're getting the money back for you and for every man and woman on the street who put it there," he says.

For anyone still tempted to buy into Sean Quinn's line that the IBRC is "trying to pin the blame" on him for the country's difficulties, Mr Aynsley continues with a breakdown of the eye-watering numbers.

"I mean, just imagine, out of all the money he [Sean Quinn] owes, we've already made provision for €2.3bn. People ask: 'what does that mean?' Well, that means we've provisioned it. It's already gone through our profit and loss statement. We've lost €2.3bn. Part of the €29bn that the taxpayer has put in was to fund that €2.3bn, so the taxpayer funded that €2.3bn. Anything we can get back, we will. We haven't provisioned the whole lot, there's still €500m [in assets] left outstanding. If Mr Quinn's activities end up seeing any of these assets shifted in these foreign jurisdictions away from our capacity to recover the value of them, we'll have to provision further, which means the taxpayer will have to take a further hit. This is nothing personal. There is no vendetta against Mr Quinn. That's just rubbish and smoke and mirrors and I think it's a case of 'Ooh, I'm being hard done by'. The guy incurred a debt. We're collecting it. When we've collected it, it reduces the cost already being paid by the taxpayer."

But what of the view being expressed by some that the IBRC is trying to get blood out of a proverbial stone when it comes to pursuing the former billionaire?

"There's a property portfolio there and we're spending a lot of money to ensure we can protect it and protect the value of it, because if we lose control of it, we're going to take a further hit. That's real money. It's a half a billion euro of properties and if we can't protect them, and €100m disappears, then we only get €400m back. This is not blood out of a stone. This is the real deal," Mr Aynsley says.

To be fair to the IBRC, Sean Quinn certainly isn't being singled out for attention when it comes to the matter of recovering taxpayers' money.

Even those who worked at the most senior level in Anglo Irish Bank and the Irish Nationwide Building Society (which came under the IBRC's umbrella last July) are being pursued for money they received by way of loans, bonuses, and in some cases, questionable 'golden handshakes'.

Commenting on this, Mr Aynsley says: "We're pretty far into all these areas. We just want to make sure that nothing falls between the cracks. There was a lot in the old Anglo that was undocumented and frankly just bizarre. Some of the payments you talk of were not properly approved. It was a matter of just giving people a chunk of money. In those cases, we will see what we can recover.

Asked if he had made any progress with former Irish Nationwide chief executive Michael Fingleton in seeking the return of the €1m bonus and €11,500 watch he received on his retirement, Mr Aynsley says: "He hasn't written back. He hasn't come back to me. Without going into detail, next year will be an interesting year in addressing the issues at Irish Nationwide."

Asked if the IBRC has managed to recover any of the €110m which former Anglo Irish Bank chairman Sean FitzPatrick owes it, he says: "We regularly get recoveries [of money he owes]. There has been money coming back. There will be a lot of stuff about this in the end-of-year accounts."

On the matter of former Anglo chief executive David Drumm, Mr Aynsley says: "We were headed towards a solution, and without reference to us, he filed for bankruptcy in the US. We're still in a position where we'd like to reach a resolution to get as much back as we can. There's got to be a willingness on his part to do that, but if there's not, we'll just keep at him."

Not that all of Mike Aynsley's working or waking hours are taken up pursuing Anglo's former management or their biggest single creditor, Sean Quinn.

There are other matters to attend to, not least of which is the careful wind-down of Anglo's multi-billion euro loan book. On this, Aynsley and his team have made considerable progress. By the end of 2011, the total value of loans on the IBRC's books will have fallen to a figure just shy of €18bn compared to the €108bn recorded prior to the night of the bank guarantee in September 2008, and the €95bn recorded at the time of Anglo's nationalisation in January 2009.

The successful sale of the bulk of Anglo's US portfolio, which was completed on December 6 last, represented the most significant step in this regard. The $7.75bn transaction is something of which the IBRC chief is clearly proud.

He says: "Everything to do with price is determined by how much you know and how well you've managed the loan, so if you've got gaps in information when people are looking to buy and you can't answer questions, people will pay you less. I don't think we even believed at that stage [in late 2010] that we'd be in a position to sell the whole US portfolio. It was really a matter of getting ready for when the market was ready. We were very fortunate because by March when that work was nearing completion, it was becoming clear that the market in the US was opening up, and there was huge interest in buying this loan portfolio because of its quality."

Asked for his response to claims made by Fine Gael TD Billy Timmins in the Dail recently that the IBRC was -- along with the AIB -- underselling its loan book, Mr Aynsley says: "That's just rubbish. I don't know where these people come up with these comments from. It's just not true. We are very careful and diligent about the portfolio we have, and we make sure it's understood what's in that portfolio, and the valuation of the underlying assets and the loans themselves. The process we go through is competitive and open."

Mr Aynsley is also keen to address repeated criticisms of the high pay being given to his team at a time of near national bankruptcy.

He says: "We have this issue from time to time where people say: 'You've still got all these people working there.' Yes, we do. 'You're still paying them a lot.' Yes. Of course. We are still paying them a lot. If we don't get the equation right, then the costs could be quite horrific. Put the politics of it aside; if you pay an amount of money you don't really like to support the loan portfolio, and it saves you €100m in the end, then I think the public will understand that. What they won't understand is if you manage something poorly and you have to go to them and ask for another €100m. That's the trade-off."

Referring to the recent sale of Anglo's US loan portfolio, he adds: "There were a very large number involved in the bidding process in the US. It [the US portfolio] went to three different counterparties; two of those -- JP Morgan and Wells Fargo -- took the high quality end of the portfolio on to their own balance sheets. They're fortunate enough to have huge surpluses of liquidity and they're looking for assets. The rest of it went to Lone Star, who deal with distressed assets. The pricing we got, we're very happy with. We're certain if we launched it today, given what's happened with the market, the result wouldn't have been as positive."

Whatever window of opportunity there may have been for the IBRC to offload its US portfolio at the right price, it's probably safe to say that the residential mortgage book it inherited from the former Irish Nationwide Building Society last July will be harder to shift.

Asked how the IBRC intends to deal with the ordinary mortgages on its books given that the bank itself is being wound down, Mr Aynsley says: "We have a simple philosophy. We're a workout organisation. We know we're going to zero. That means that eventually we have to be repaid, and that either comes from the customer or another financial institution that's going to refinance that asset for the customer."

By way of reassurance, he adds: "We know how difficult it is out there at the moment while the State goes through this deleveraging. I think it's very important that we don't push the deleveraging agenda too quickly as you can push people over the edge. We don't intend to do that. We want to work consensually with people in a constructive way to come up with a solution and a reconstruction of their exposures so that it makes it either easier for them to repay us over time, or it's easier for them to refinance it. So we want to work with people."

So when asked how difficult he thinks it will be to sell the Irish Nationwide residential mortgage book on to another financial institution, given the sharp decrease in the value of the houses and apartments underpinning it, he offers a response that suggests a requirement for some form of State intervention.

He says: "These are the problems and there are all sorts of strategies being looked at around mortgage arrears and the solutions that we need to deploy there. This is an issue that's clearly bigger than IBRC. All the banks have the same problem. The strategy that's deployed has to be one that recognises the difficulty created by the fall of the magnitude that we've had and the exposures that people have as a result of it."

Another issue that Mr Aynsley suspects could prove to be 'bigger' than the IBRC (or its former namesake, Anglo) in terms of its cost to the taxpayer is AIB.

Commenting on this, he says: "Well, the AIB is still going through the process of getting to the bottom of what's in their loan books. We started the process very early in getting in underneath things on a loan-by-loan basis. We've had the advantage of time. The other advantage is that we're smaller. They've got something that's akin to the Titanic to turn, and so I think you've got a ways to go. If you think across from participant to participant in the Irish market at the same time with the same aggressive lending fashion, with portfolios of the same massive scale, I still have my doubts that the problem there [in AIB] isn't akin to the problem here."

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