Business Irish

Friday 23 February 2018

Relief at last for Ireland as ECB agrees to deal on debt burden

Taoiseach Enda Kenny with Finance Minister Michael Noonan as he addresses the Dail early
today on legislation to facilitate liquidation of the IBRC, formerly Anglo Irish Bank
Taoiseach Enda Kenny with Finance Minister Michael Noonan as he addresses the Dail early today on legislation to facilitate liquidation of the IBRC, formerly Anglo Irish Bank

Colm Kelpie and Fiach Kelly

THE European Central Bank has agreed a deal to ease Ireland’s crippling debt burden, according to sources.

A source involved in the talks told Reuters this afternoon that “a deal is done”, while declining to give details.

ECB President Mario Draghi was expected to comment on the reported agreement at a conference in Frankfurt this afternoon.

The agreement comes a day after the Government rushed through emergency laws to liquidate the former Anglo Irish Bank.

Earlier today, Finance Minister Michael Noonan said preparations to liquidate the former Anglo-Irish Bank had been under way months ago.

He admitted the Government nearly had to make the dramatic move to wind it up on several occasions in the last few months, as word of the top-secret plans almost leaked out.

The bill to liquidate the Irish Bank Resolution Corporation (IBRC) has now passed the Seanad and the Dail and President Michael D Higgins signed into law at Aras an Uachtarain shortly after 6am today.

The President flew back from a visit to Rome specifically to sign the Bill and will return to Italy today.

Mr Noonan also said he “knew for months” this would be the approach the Government would take as part of the process to secure a deal on the promissory notes.

The legislation is understood to have been ready from as far back as last September or October, and Mr Noonan said it was the first step towards a deal.

He also said the Coalition had hoped to be wrapping up an entire deal on the promissory notes at the same time, but this proved impossible.

"When we weren't in a position to deny we were liquidating IBRC, we were forced to act," Mr Noonan said. "We would prefer we were doing everything together.

“This legislation was prepared for months and it was drawn down this evening because of that fact that market sensitive information was released in a credible way,” Mr Noonan told the Seanad.

The leaked information yesterday forced the Government’s hand, he added.

“I could not deny the Government was considering the liquidation of IBRC. We had to act to protect the position. We had long prepared for this.”

He also said KPMG – who are now in temporary control of IBRC – were also aware of the plans “and they had all their arrangements in place as well” with people ready to protect IBRC assets in New York, Dublin and London.

But Mr Noonan admitted there were “several scares” in the past few months that there were “substantial leaks” – which could have meant acting sooner.

He also said the board of IBRC was also kept in the dark for legal reasons.

“While there were a lot of people in the loop of knowledge, IBRC weren’t,” he said, adding that it made it impossible to prepare for job losses.

He said the European Central Bank will again discuss the proposed promissory note deal today, which he claimed will be a good deal if secured. But the deal could still take weeks to finalise.

“I don’t know, I don’t know that they’ll sign off on it or not,” Mr Noonan said of the deal during the Seanad debate, which finished just before 6am.

The Bill comfortably passed the Upper House, with Fianna Fail and the majority of Independents backing it. Those who voted against were three Sinn Fein senators, James Heffernan, who recently lost the Labour whip, and Independents John Crown and Sean Barrett. 

The bill passed through the Dail just before 3am, with Taoiseach Enda Kenny saying the "liquidation is necessary to secure the billions of IRBC assets that are ultimately owned by the Irish taxpayer".

Labour rebels Colm Keaveney, Roisin Shortall, Tommy Broughan and Patrick Nulty voted against the bill while Fianna Fail and Independent Michael Lowry supported it.

"The disappearance of the former Anglo-Irish Bank and Irish Nationwide from our financial, social and political landscape is, in my view, long overdue," Mr Kenny said.

"Both institutions became synonymous, both at home and abroad, with the reckless mismanagement of our banking system and economy under the watch of the previous government."

He said both banks were emblems of cronyism and "became a stain on our international reputation and a dent to our national pride".

“I believe that today’s agreement is a significant milestone. It closes a sad and tragic chapter in our economic and political history.”

Tanaiste Eamon Gilmore said the Government was "doing what should have been done on the night of the bank guarantee".

"This Government is doing what the last government should have done," he said, adding that the significance of wiping Anglo and Irish Nationwide – which will “live on in ignominy” - out of existence will not be lost on the Irish people.

“These banks and the people who ran them, and the golden circle around them, were the very roots of the crisis which has caused so much distress to the Irish people,” the Tanaiste said.

Mr Gilmore said the Government had to act fast once news leaked, and used the contingency plan that was held by the Department of Finance.

Wrapping up the initial Dail debate, Mr Noonan said the Government's hand was forced when news of its plans to liquidate the former Anglo leaked yesterday. "

He said IBRC assets had been secured in Dublin, New York and London.

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