Monday 17 June 2019

NTMA spent €14.5bn to tear up Anglo debt

Top role: Conor O’Kelly is the head of the National Treasury Management Agency. Photo: Fennell Photography
Top role: Conor O’Kelly is the head of the National Treasury Management Agency. Photo: Fennell Photography

Donal O'Donovan and Gavin McLoughlin

The State has paid a further €500m to buy and tear up a batch of bonds linked to the liquidation of the former Anglo Irish Bank.

The debt was bought from the Central Bank. It was issued in 2013 as part of the liquidation of Irish Bank Resolution Corporation (IBRC). Around €14.5bn has been spent buying the bonds.

The complex 'Prom Night' IBRC liquidation saw the Central Bank compensated for money it was owed by the former Anglo using a mix of taxpayer-funded IOUs including €25.03bn of Floating Rate Notes (FRNs), and €3.461bn of the Irish Government bonds. Taxpayers are on the hook for debt plus interest.

The National Treasury Management Agency (NTMA), headed by Conor O'Kelly, has been buying the bonds in order to tear them up. Controversially, the Central Bank destroys the money it receives from the State when the purchases happen as part of its management of money in circulation.

With the latest deal the original €25bn has been cut to €10.5bn. The Central Bank originally received the bonds as part of the liquidation of the IBRC in February 2013 - the so-called 'Prom Night'. It must sell them off because it is not supposed to lend to the State which, in reality, is what holding bonds means.

In the latest transaction, the NTMA bought and cancelled of €500m of debt due to mature in 2049. If the bonds were sold to another buyer interest would have to be paid.

Meanwhile, the European Union's Court of Auditors is to probe State aid given to banks in the European Union.

The probe will only cover state aid given since 2013 - and so excludes the worst period of the financial crisis.

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