Tuesday 21 November 2017

Bond sales brought in €1.1bn for bank, says Honohan

CENTRAL BANK IS DOING GREAT: Well, their pals in the Netherlands would say that, wouldn't they?
CENTRAL BANK IS DOING GREAT: Well, their pals in the Netherlands would say that, wouldn't they?
Colm Kelpie

Colm Kelpie

The Central Bank has made about €1.1bn to date on the sale of fixed and floating rate government bonds.

The bulk of the money will be used to reduce the national debt.

As part of the liquidation of the Irish Bank Resolution Corporation (IBRC) in February 2013, the Central Bank acquired €25.03bn of long-dated so-called Floating Rate Notes (FRNs), and €3.461bn of the Irish Government 2025 Fixed Rate Bond, which was due to mature in March of 2025.

During the course of last year, the assets held by the Central Bank and linked to the liquidation had dropped to €25.8bn, made up of €24.5bn worth of FRNs, €900bn of the Fixed Rate Bond and about €400m worth of Nama bonds.

Central Bank governor Patrick Honohan said yesterday that all of the IBRC-related Nama bonds have been redeemed, and that all of the fixed rate bonds have now also been sold.

The Central Bank also sold €500m of the 2038 FRNs to the National Treasury Management Agency (NTMA) in December.

The Central Bank noted that Government bonds have been attracting higher prices, and as a result, the value of the Government bonds on the Central Bank's balance sheet has also risen. "These gains are recorded as unrealised gains and contribute to the Central Bank's accounting reserves but not to its profits, unless or until they are sold," the Central Bank said.

"When the Central Bank sells one of these bonds, however, it realises a gain which is then recorded as part of its profit.

"The total realised gains on sales of the fixed and floating rate government bonds to date are approximately €1,057m."

Mr Honohan said €1bn will go towards reducing the State's debt. The Central Bank said there has been no disturbance to the market of any bond sales to date.

Mr Honohan said the bank made a record profit of €2.1bn in total last year. After retained earnings, €1.7bn is being paid over to the Exchequer.

The governor said that over the six years of his tenure, profits have totalled €8bn.

"The unprecedented scale of profits earned in recent years reflects several exceptional crisis-related factors and the manner in which they have been handled by the bank," he said.

Irish Independent

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