Business Irish

Sunday 17 December 2017

Taxpayer sobered up by €130m bar bill

Tom Lyons

The taxpayer has officially lost every penny of a €130m loan made by Michael Fingleton's Irish Nationwide to two British families to buy a chain of pubs.

The deal, one of the worst made by the toxic building society, equates to five times the savings of €26m inflicted on respite carers in last December's budget.

The massive losses were incurred on Admiral Taverns, Britain's third largest pub company, which was founded by the Landesberg and Rosenberg families.

At one stage Admiral owned 2,500 pubs financed by borrowings of €1.2bn from Lloyds Banking Group and Irish Nationwide. This was later reduced to between 1,000 and 1,100 pubs as the group deleveraged.

Last week private equity giant Cerebus Capital Management bought Admiral's remaining pub portfolio for €246.5m. Lloyds has taken a €740m hit on its dealings with Admiral, one of the bank's largest single losses during the financial crisis.

However Irish Nationwide has lost all of its €130m because of the more high-risk way it lent money.

The Landesberg and Rosenberg families are in the top five borrowers of failed Irish Nationwide. Its main movers are Alan Landesberg and his son Gary and brothers Elliot and David Rosenberg.

The Irish taxpayer has taken massive hits on Nationwide's exposure to the families in part because of the property crash. Fingleton and his management team exacerbated losses by lending to the two families not only at the peak of the property bubble but also via special purpose vehicles. This use of SPVs ensured the society had no recourse to the borrower when deals went bad.

The manner in which Irish Nationwide operated in the commercial property market was akin to a hedge fund with the bulk of its loans clustered around just 30 borrowers.

Almost the entire reckless bill for the society's greed was shifted to the Irish taxpayer when the State decided by itself in 2009, and later under pressure from Europe, to bail out its bondholders by paying them off in full.

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