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Archive for June 24th, 2012

“I put my cards face up on the table, saying, ‘Look, it’s no longer a bank. Anglo is now merged with Irish Nationwide. It’s a warehouse for impaired assets. Its deposit base has been moved out into the pillar banks. And it doesn’t work as a bank anymore. You can’t put your money on deposit in Anglo Irish. You can’t get a loan from Anglo Irish. So the only thing that gives it the name of a bank is because it has a banking license. It needs the banking license to access the monies from the Central Bank. So I said that as far as I am concerned, this is not a real bank. This is a warehouse, and we need your assistance in dealing with the senior bond holders because we don’t think the Irish taxpayer should have to redeem what has become speculative investment. I don’t think it should be redeemed (unintelligible).” Minister for Finance, Michael Noonan in an interview with RTE’s Richard Downes in the USA in June 2011.

This blog has run out of new ways to articulate the lunacy of the State paying the private banking debts of bust banks, whilst the State itself is broke – banking debts NOT covered by the 2008 banking guarantee, banking debts NOT secured on bank assets. So this is a simple blogpost to provide basic information on the payments that will be made this coming week by the Irish Bank Resolution Corporation – “IBRC”, the bank formed last year after the merger of Sean Fitzpatrick’s Anglo and Michael Fingleton’s Irish Nationwide Building Society.

What: Four senior bonds at IBRC. The four bonds are “unsecured”, that is, not tied to any specific asset in IBRC. The four bonds are “unguaranteed”, that is, not covered by the guarantee given by the Irish government in September 2008.

When: Tuesday, Wednesday and Thursday this coming week, 26-28th June, 2012

How much: The bonds are denominated in sterling, US dollars and euros. At this morning’s exchange rates, the total is €1,141,716,762

Where: The payment will be made by IBRC to a so-called “bond clearing” company which will then disburse the payment to the individual bondholders. The payment will be authorised on a computer terminal which is likely to be at IBRC’s de facto headquarters at Burlington Road inDublin.

Who: We don’t know the identity of the bondholders, but Minister Noonan said last year that there were likely to be speculative investors. The bond clearing companies do know the identities of the bondholders but won’t make that information public.

Why: Because “a nod is as good as a wink to a blind horse” apparently, but NOT because it is a term of the Memorandum of Understanding with the bailout troika, NOT because the bonds are covered by the bank guarantee given in September 2008 and at this stage, NOT because Ireland is receiving “unprecedented” support from the ECB; with the intensifying EuroZone crisis, the liquidity provided by the ECB to Irish banks is proportional to our economy.

Remember Ireland is a country currently in a double dip recession, our GDP having collapsed by 10%, with a debt:GDP next year of 121%, with a deficit of nearly 9%, with unemployment at a record 14.8%, in the middle of an IMF bailout programme and whose banking collapse is costing 40% of GDP. Our GDP in 2011 was €156bn, our more representative GNP was €124bn. IBRC has received €34bn of a bailout representing more than 20% of our GDP. I cannot find another bank or business in the world, in history, that has cost a country so much of its national income and which is still a dead bank, that doesn’t lend, that doesn’t take deposits, that doesn’t have branches.

A fortnight ago, the Sinn Fein finance spokesperson Pearse Doherty tackled Minister Noonan about these payments. The Minister confirmed the payments would be made, but expressed helplessness and ignorance. The full exchange is here. The Minister’s claims are tested here.

Lunacy.

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Paddy Shovlin, the business partner of the Fitzpatrick brothers, Tony and Patrick, was declared bankrupt a month ago in London on 29th May, 2012. His bankruptcy was first reported in the Irish media by Ronald Quinlan in the Sunday Independent today. His bankruptcy record from the UK Insolvency Service is shown above. One of his erstwhile business partners, Patrick Fitzpatrick was declared bankrupt in the UK on 12th April, 2012. There is no record for Tony Fitzpatrick with the UK Insolvency Service.

Paddy gives his residential address in the bankruptcy record as an apartment in Earl’s Court in south west London, and also provides a trading address just off the wrong end of the upmarket King’s Road in Chelsea. A “former” Irish address on Kerrymount Avenue in Foxrock, Dublin is also provided.

Paddy has been in the wars with NAMA from the beginning, and in October 2010, NAMA secured its first personal judgments against Paddy and the two Fitzpatrick brothers. NAMA has moved against his flagship company, Landmark and its mixed residential/commercial development of the Beacon South Quarter in south-west Dublin.

Paddy has the distinction of being the tenth NAMA developer to be declared bankrupt in the UK, the other nine being Ray Grehan, his brother Danny Grehan, Tom McFeely whose bankruptcy is being challenged in the UK at present, John Fleming whom NAMA is still pursuing seeking an attachment to earnings for two years, Bernard Doyle of Spain Courtney Doyle fame, Northern Irish developers Alastair Jackson, Fergal McAlinden and Peter McDaid; and of course Paddy’s Shovlin’s erstwhile business partner, Patrick Fitzpatrick.

NAMA’s chairman, Frank Daly who was previously the chairman of the Irish tax authorities, the Revenue Commissioners has darkly warned that just because a developer wins bankruptcy in the UK – and when you consider the standard bankruptcy period in the UK is just one year compared to 5-12 in Ireland, it is a “win” – doesn’t mean NAMA loses interest in them. The pursuit of an attachment order on John Fleming’s earnings and his pension is proof of that, but overall, NAMA appears to have been more bark than less bite in this area.

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