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State faces being sued if IBRC fails to pay debts

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CONFIDENT: Wolfgang Klopfer

CONFIDENT: Wolfgang Klopfer

CONFIDENT: Wolfgang Klopfer

THE CEO of a leading German-based investment fund has warned that his company may sue the State should the IBRC fail to honour its commitment to repay millions of euro owed to its subordinated bondholders.

Dr Wolfgang Klopfer, of Munich-based Xaia Investments, said that even though the IBRC was now being liquidated, he believes it has sufficient money to pay back all its creditors, including those who invested through his company.

"There was a Core Tier 1 ratio of 5 per cent [in IBRC] and all the markets which represent assets they have on their balance sheet have been rallying since their last income statement," he said.

"I expect that the IBRC made enough money on the assets they held, and therefore I expect the bank to still have enough money to pay back all their creditors. I know there is speculation that this will not be the case but there have been no facts [to support this] up to now."

Asked if Xaia – formerly known as Assenagon Asset Investment – would consider taking legal action against the State in the event that the IBRC's special liquidator tried to burn its junior bondholders, Dr Klopfer said: "We are looking at the situation but as long as there is no official information out yet on how this whole process works, then obviously we haven't made any decision.

"I expect a European government to act within the laws and once they act within the laws, there is no need to sue. I'm very confident that they will do it – and if they don't do it, yes."

Asked if he believed the liquidation of the IBRC had in fact been contrived, Dr Klopfer said: "We have to speculate what really happened inside the actual liquidation process.

"I understand it if I have a limited liability company elsewhere in the world, I can liquidate it whenever I want. So if I liquidate Xaia Investments tomorrow morning, I can do that; it's not a problem. I will not do it, but I can do that.

"Obviously the IBRC case is a run-off bank, and the Irish Government said that. So they are able to liquidate the bank whenever they want. But, to be honest, I expect that to be a lawful process and I would expect every secured and unsecured creditor to get something back.

"There was no solvency problem in the bank, there was no liquidity problem in the bank – so why should I assume that I won't get back anything?"

Asked if Xaia had any expectation of recovering anything approaching 100 cent in the euro on its investment, Dr Klopfer said: "Yes. That's nothing new, is it?"

Notwithstanding the care with which the Xaia chief framed his remarks in relation to the IBRC, they are sure to cause concern within the Government, coming as they do just days after Finance Minister Michael Noonan was forced to extend the deadline for the valuation of the bank's loan book.

In a statement last Friday, a spokesman for the bank's special liquidator, Kieran Wallace, confirmed that the deadline for the completion of the process was now being pushed back by four months to November 30.

Irish Independent