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Anglo Irish wind-down 'will take more than 20 years'

THE wind-down of the former Anglo Irish Bank is likely to be extended to "more than 20 years" as a result of plans to move €30bn of tracker mortgages into the collapsed institution, the Irish Independent has learned.

The news comes as Irish Bank Resolution Corporation (IBRC, formerly Anglo) will report today that it has dramatically reduced annual losses from 2010's €17.6bn and update the public on "activity in relation to the bank".

The wind-down was initially expected to take 10 years. When the bank announced losses a year ago, Anglo management believed the run-off could be shortened to as little as "three to four years".

Sources this week confirmed that the latest plans to move tracker mortgages from Permanent TSB and AIB into IBRC had ended any hopes of a fast wind-down.

That means the State may have to wait longer to get back any surplus that IBRC ultimately has. Officials believe the savings from bundling the tracker mortgages in with IBRC outweigh that cost.

"There's a view that we should put everything into IBRC and make the best possible use of it," one source said.

Some of the tracker loans involved have close to 30 years left to run. IBRC already has lengthy mortgages from Irish Nationwide, but had hoped to be able to sell that portfolio by 2016.

The tracker mortgages are unprofitable because their interest rates are well below what banks must pay to borrow. This makes them hard to sell because they're hard to value.

IBRC may also be given other "hard to price, hard to sell" assets from state-owned banks under a major bank restructuring plan being drawn up by the European Central Bank, European Commission and International Monetary Fund.


Central Bank governor Patrick Honohan this week told a parliamentary committee it could take "several months" for that wider plan to be agreed.

The ECB is particularly keen to wean IBRC off about €40bn of 'emergency liquidity assistance' (ELA) that the bank has been drawing down from the Central Bank of Ireland.

The Irish Independent understands, however, that there is now an acceptance that IBRC's use of ELA will rise over the coming months as the bank pays off more bondholders.

IBRC has €2.7bn of bonds maturing this year. A €9m senior unsecured bond was repaid yesterday.

The next payment is due on April 16 and is for €1.5bn of government-guaranteed debt issued in 2010. A €598m senior unsecured bond falls due on June 26.

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