A protracted war in Ukraine could further delay and push up the costs of the planned former Anglo Irish Bank’s liquidation.
The Irish Bank Resolution Corporation (IBRC) – created in 2011 from the remnants of Anglo and the Irish Nationwide Building Society – was due to be wound up this year, but that was delayed until the end of 2024 due to the pandemic and a series of legal challenges.
While that deadline is still in place, the latest progress report from the IBRC’s special liquidators says it is “dependent on stabilisation of the Russian and Ukrainian markets”.
Asset values had started to recover following the pandemic, the liquidators said, but the war “has impacted asset values in Russia, the Ukraine and the Czech Republic”.
The liquidators - Kieran Wallace and Eamonn Richardson of accountants KPMG - “do not believe it would be possible to launch a sales process in these countries for some time”.
“In particular, there is currently major uncertainty in relation to the current realisable value of the Ukrainian assets located in Kyiv,” they say in the report.
“There is also uncertainty as to what the impact of the current conflict will be on commercial property in Russia, the extent and duration of the current sanctions and the possibility of additional sanctions.
“At the present time, it is extremely difficult to assess the current impact on the value of assets in Russia and the Ukraine."
The liquidators say the sale of Russian and Ukrainian assets “could occur in 2024”.
Almost two-thirds (60pc) of the assets still on the IBRC’s books are in Russia and the Czech Republic, while 4pc are in Ukraine.
The rest are in the US, Ireland, the UK and Asia.
The bulk of the assets are hotels and office space belonging to the family of businessman Sean Quinn.
Just this week, Dublin’s iconic Buswells hotel - another of Mr Quinn’s former properties that was taken over by the IBRC - was placed on the market by property advisor Savills, with a guide price of €22m.
The bailout of Anglo and Irish Nationwide in 2009 cost the state €34.7bn.
Approximately €1.7bn has been paid to State agencies from the disposal of IBRC assets since it was put into liquidation in 2013, the ninth progress report said.
The total cost of liquidating IBRC so far, excluding liquidators’ fees, is €454.6m. Just over €200m of that was made up of KPMG fees.
The IBRC has a remaining loan book of €3.5bn, while net cash as of February this year was €55m. Cash inflows were €24m in the year to February and outflows amounted to €45m, the report said.
According to the report, the liquidators are managing 21 outstanding legal cases, down from 29 at the end of 2020. The IBRC is a defendant in nine cases.
Finance Minister Paschal Donohoe said the legal cases, Covid-19 and the war “have affected the asset realisation strategies of the special liquidators”.
“It is important that the liquidation process maximises the ultimate return for the State,” he said.
"On that basis, it was agreed that the liquidation be completed by end-2024, subject to ongoing review.
“This will allow the special liquidators to achieve the best possible return for the taxpayer on the remaining assets while also concluding the remaining legal cases which IBRC are party to.”