Ireland liquidates bank in emergency vote
Source: Agencies |
February 8, 2013, Friday
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IRELAND dissolved one of its "bad banks" yesterday in an emergency measure designed to pave the way for a new debt-repayment deal with the European Central Bank.
Lawmakers overwhelmingly voted to liquidate the Irish Bank Resolution Corp, or IBRC, in a session that began just after midnight and ended by 6am yesterday.
Ireland's head of state, President Michael Higgins, was summoned back from the start of a three-day visit to Italy to sign the bill into law an hour later.
Finance Minister Michael Noonan told lawmakers they must approve the measure before Ireland's courts opened yesterday because private creditors of the state-owned debt management bank would file lawsuits to block or complicate the bank's dismantling.
Noonan said shutting the two-year-old bank would "come as quite a shock" to its 800 employees, who lost their jobs, but he said the government had no choice after its plans, drafted months ago, were leaked to news agencies.
"Did you ever hear of a liquidation that was announced one day and not implemented for several days or weeks?" Noonan told lawmakers, many of whom were given just minutes to read the 57-page bill. "Creditors will line up to strip the company of everything they can lay their hands on, and debtors will not pay a penny because they know the company is going into liquidation."
Ireland plans to transfer IBRC's property-based assets worth 12 billion euros (US$17 billion) to the nation's other toxic-debt management bank, the National Asset Management Agency, or NAMA.
Noonan said he was hopeful that European Central Bank governors meeting in Frankfurt yesterday would approve Ireland's latest proposals to reduce its annual bank-bailout bills. Ireland has been seeking such a deal for two years.
Ireland created IBRC to manage the broadly defaulting property-based loans of two collapsed banks, Anglo Irish and Irish Nationwide, the two most reckless property gamblers during Ireland's cheap credit-fueled Celtic Tiger boom. Both banks faced ruin when that property bubble burst in 2008.
Under terms of a 2010 agreement between Ireland's previous government and ECB chiefs, Ireland must pay 3.06 billion euros a year to 2023 and smaller amounts to 2031 to cover the costs of repaying the global bondholders of Anglo and Irish Nationwide. The total cost of that agreement, including interest, is 48 billion euros, or more than 10,000 euros for every man, woman and child in Ireland.
Since gaining office two years ago, Prime Minister Enda Kenny has lobbied European partners to reduce those repayment costs by lowering their interest rates and spreading payments over an even longer period.
Kenny has stressed that Ireland wasn't seeking any default or partial write-offs of the debt, because that would undermine Ireland's efforts to repair its creditworthiness.
Lawmakers overwhelmingly voted to liquidate the Irish Bank Resolution Corp, or IBRC, in a session that began just after midnight and ended by 6am yesterday.
Ireland's head of state, President Michael Higgins, was summoned back from the start of a three-day visit to Italy to sign the bill into law an hour later.
Finance Minister Michael Noonan told lawmakers they must approve the measure before Ireland's courts opened yesterday because private creditors of the state-owned debt management bank would file lawsuits to block or complicate the bank's dismantling.
Noonan said shutting the two-year-old bank would "come as quite a shock" to its 800 employees, who lost their jobs, but he said the government had no choice after its plans, drafted months ago, were leaked to news agencies.
"Did you ever hear of a liquidation that was announced one day and not implemented for several days or weeks?" Noonan told lawmakers, many of whom were given just minutes to read the 57-page bill. "Creditors will line up to strip the company of everything they can lay their hands on, and debtors will not pay a penny because they know the company is going into liquidation."
Ireland plans to transfer IBRC's property-based assets worth 12 billion euros (US$17 billion) to the nation's other toxic-debt management bank, the National Asset Management Agency, or NAMA.
Noonan said he was hopeful that European Central Bank governors meeting in Frankfurt yesterday would approve Ireland's latest proposals to reduce its annual bank-bailout bills. Ireland has been seeking such a deal for two years.
Ireland created IBRC to manage the broadly defaulting property-based loans of two collapsed banks, Anglo Irish and Irish Nationwide, the two most reckless property gamblers during Ireland's cheap credit-fueled Celtic Tiger boom. Both banks faced ruin when that property bubble burst in 2008.
Under terms of a 2010 agreement between Ireland's previous government and ECB chiefs, Ireland must pay 3.06 billion euros a year to 2023 and smaller amounts to 2031 to cover the costs of repaying the global bondholders of Anglo and Irish Nationwide. The total cost of that agreement, including interest, is 48 billion euros, or more than 10,000 euros for every man, woman and child in Ireland.
Since gaining office two years ago, Prime Minister Enda Kenny has lobbied European partners to reduce those repayment costs by lowering their interest rates and spreading payments over an even longer period.
Kenny has stressed that Ireland wasn't seeking any default or partial write-offs of the debt, because that would undermine Ireland's efforts to repair its creditworthiness.
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