Saturday 17 March 2018

Junior bondholders set to be burned in Anglo payouts

Finance minister Michael Noonan. Photo: Tom Burke
Finance minister Michael Noonan. Photo: Tom Burke
Colm Kelpie

Colm Kelpie

Junior bondholders in the former Anglo Irish Bank are not expected to get their money back, according to the best estimate of liquidators Kieran Wallace and Eamonn Richardson.

The special liquidators said the dividend to unsecured creditors, which includes the State, is expected to be in the range of 75pc to 100pc, according to the latest progress report on the bank's wind-up.

But it says this will not include a payout for junior, or subordinated, bondholders, who have made claims of around €285m.

"It is anticipated that a dividend will be available for unsecured (but not subordinated) creditors but it is difficult to ascertain the quantum at this stage as the outcome of certain claims have yet to be determined," the report said. The State is expected to get paid €275m by the end of this year as a result of an interim dividend of 25pc which is due to be paid to unsecured creditors.

Some €1.1bn overall is owed to the State for money paid out to IBRC customers whose savings were guaranteed by the State at the time of the liquidation.

Unsecured creditors also include dozens of businesses whose bills to the bank were outstanding when the plug was pulled on the institution. Unsecured subordinated bondholders are then next in line to get paid, but a Department of Finance spokesman signalled this was unlikely. "It's only in the scenario where there's money left over again… when the unsecured are sorted, that we would go to the junior bondholders. What the likelihood is of that, I don't know," he said.

But he confirmed it was not foreseen at this point.

The report also showed that almost €187m has been paid out in fees associated with the special liquidation, although about €8m of that is being repaid. Around €24.5m was racked up in fees last year alone.

The report has also cleared accountancy giant KPMG of any negligence in respect of its 2008 audit of Irish Nationwide, and that "no viable claim" exists against law firm McCann FitzGerald for advice that it provided.

The special liquidators also said that it has submitted its report on the conduct of the directors of IBRC in the year to February 2013 to the Office of the Director of Corporate Enforcement and that the matter is "ongoing".

IBRC was rushed into a dramatic liquidation on February 7, 2013, on the orders of Minister Noonan. Around €35bn was pumped by the State into Anglo and Irish Nationwide, but the vast majority of that money is now lost.

The Government is confident of getting back its investments into AIB and Bank of Ireland.

Finance Minister Michael Noonan said the dividend range to unsecured creditors is subject to change. He said a cash balance of €2.23bn had been generated.

Irish Independent

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