“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.
NAMA Wine Lake 
Reblogged this on Brian M. Lucey and commented:
As NWL says…Lunacy
Reblogged this on Hugh Sheehy – idealistic musings and commented:
And the government wonders why people lose faith.
Same Circus, Just a different set of clown’s.
@Nwl
Do you have suggestions for the average person to express discontent at this political decision?
@kd, You can take a look at what the communities of Ballyhea and Charleville do each week, and have been doing for a year and half.
http://www.facebook.com/pages/Ballyhea-bondholder-bailout-protest/162154057174719
You can write to your government TD and to senators demanding answers – what have they done to deal with legacy bank debt including the bondholders. You can also write to opposition TDs and senators and ask them what they have done, and what they would do if they held the reins of power today.
There may be a token protest in Dublin outside the bank or the Department of Finance. There may be a protest in the Dail or Seanad.
But what do you do when something dreadful is happening to you and you can’t control it?
There is that Liam Neeson film “Taken” where his daughter is kidnapped by Albanian people-traffickers in Paris for sex slavery. At the start of the film, there is the scene when the daughter is hiding in an apartment in Paris being ransacked by the Albanian gang, and she is on the mobile phone to her father, Liam Neeson in America, who plays a character retired from the US secret services. And Liam is talking her through her ordeal, telling her that she will be “taken” in minutes when the gang find her, but then there is the intelligent bit: he asks her to describe the events unfolding so as to help him track her down. And maybe this is all you can do this week, challenge your TDs and senators, then when you do have power and control in the future, you can remember the details of this week and you can do something.
Why are the unguaranteed, unsecured bonds being paid back in full? Is it because the rulers (to include the various European, ECB and IMF head honchos) fear the bondholders’ threat: “Pay us back in full or we’ll screw you for generations”. What exactly is their threat and why is it so powerful?
What’s the big deal? You seem to conveniently forget that the IBRC is receiving massive funding via ELA, which implies that it is solvent and solvent institutions are expected to pay their bills.
@Alea, what is the “big deal” with an insolvent country in an IMF bailout programme with debt:GDP of 121% next year, a near-9% deficit, 14.8% unemployment paying unsecured, unguaranteed bondholders in the world’s most bust bank?
Now that is what the Americans would call a “thinker”!
Nobody is stopping Ireland from liquidating the IBRC in which case you can burn the bondholders.
As long as the IBRC is solvent as it is represented to be in order to get ELA funding, Ireland has no business picking on bondholders, regardless of the macro conditions. In civilised countries, solvent institutions pay their bills, it’s that simple.
Today’s Sindo-regarding head of FAI but appropriate comment on the political obsession with full payment for bond holders and the general level of financial immaturity in Ireland.
“In England and Ireland, this is habit,” Trapattoni said. “Sometimes when I’m surprised by some behaviour, I’m told ‘we are Irish’ or ‘we are English’. It’s difficult to understand but it is the habit of the country and it’s not easy to change the habit of the people. It’s a cultural thing. We have the same problem sometimes with the players.”
Regarding the “players” in the Anglo saga,young Jonathan Fitzpatrick is working in Fiji,for Mr. O’Brien,the oul man was reported to have accompied Mr. O’Brien to Poznam.While the ongoing investigation crawls along,make a deal “turn” one the main players,make him/her sign like a canary.
At least Delaney,got his shoes and socks back,any chance of a sign song for the bond holders next week,come on lads sure Anglo was only giving it a lash!
http://www.independent.ie/sport/soccer/euro-2012/irish-news/im-entitled-to-the-odd-night-out-too-delaney-3147499.html
http://technews.tmcnet.com/news/2011/05/15/5510858.htm
The Phoenix or Broadsheet.ie has the O’Brien/Fitzpatrick Poznam story…no chance of it appearing in the Indo.!
Good God nwl……..great analysis and reporting as always……but what a truly surreal and grim state of affairs. The action by Diarmid O Flynn of Ballyhea Bondholder Protestors [posting the demands to the door af the ECB in Frankfurt] and his subsequent appearance on Vincent Browne really put our leaders to shame. And when one reads the facts in black and white, as in this piece, even more so. A terrible reality.
@Alea familiar with your point,in that Anglo can not be both,insolvent and receive ELA funding.There has been no explanation other than some guff about “banking license” as to why it’s not in receivership,Wa Mu or Washingon Mutual was the biggest bank/thrift failure in US,Lehman was bigger but not a bank.It was seized,broken up an placed into Ch. 11. bond holders got burnt.Wa Mu was clean,surgical,very little drama no tears.Anglo is still around,does beg the question why and to who benefits,certainly not the Irish people.
“All WaMu depositors will have access to their cash, but holders of more than $30 billion in debt and preferred stock will likely see little if any recovery.”
http://online.wsj.com/article/SB122238415586576687.html
@alea_ They are not my debts, but I am being forced to pay them. Nothing civilised about that.
Remember when Mr. T Geithner from the far off US of A was supposed to have intervened to insist that Irish Bank debt not be defaulted on??
Perhaps this is more about Credit default swaps and the potential worldwide losses that might be triggered if such “bets” were to fall due based on Anglo/INBS/IBRC defaulting rather than the actual debts itself.
Ireland being known at the time as the wild west of finance might have had something to do with it too.
@NWL, “Lunacy”. As succinct a description of the present and ongoing situation in Ireland as I have seen.
We carry out the bidding of tax cheat Timothy Geithner lobbying for Goldman Sachs et al (his probable future employers) to ensure that they do not have to take the consequences of their misguided investments in Irish bank bonds (as Regular Lurker correctly says). However, this is only the first phase in the rape of the Irish people. A rape that is as incompetently overseen by our own treacherous politicians as was the pedophilia of the priests by the hierarchy.
The second phase will take place when, having been paid in full, the same bondholders reinvest their winnings to purchase the discounted bank assets from NAMA with funds provided by NAMA itself at below market value.
For example, The banks sell their assets to NAMA at a c. 60% discount. The consequence of that loss is transferred from the bondholders and paid for by the Irish taxpayer. NAMA places these assets for sale at the discounted price and provide 70% of the purchase funds at 3.5% interest, to the self same investors through their Private Equity funds.
To use a soccer analogy; Score: Bondholders – 2 Irish Taxpayer – 0
G.K. Chesterton penned “For the great Gaels of Ireland / Are the men that God made mad, / For all their wars are merry, / And all their songs are sad.”
I watched Ireland play Spain. We sang “The fields of Athenry” for 10 minutes in the face of a massive loss by the team. The passion was not in support of a team that was a waste of space; it was the Irish nation standing together and making their voices heard with a defiant pride.
It puzzled the viewers. The German TV commentator went quiet for 8 minutes in the face of it. You have to be Irish to understand it, but it must have confirmed Sigmund Freud’s assessment of the Irish, “This is one race of people for whom psychoanalysis is of no use whatsoever.”
The team that represents us in europe and in the most critical negotiations since the founding of this State is a waste of space. The main problem is that the full consequences of their actions have not yet been felt by the citizens of Ireland and therefore the awareness is not there. When it is, it will be too late and all that will be left will be our pride and the maudlin songs that tie us together in the continuing emigration of our families.
George Bernard Shaw claimed that “Ireland is the world’s largest open-air lunatic asylum”. He was right. But it’s not the people, who are getting the salami slice “death by 1,000 cuts” while they give us the mushroom treatment – it’s the politicians.
Nothing will change without the passion from the people. We remain, and will continue to be, the victims of the international banks. Get ready for phase 2. It’s about to begin. Phase 1 completes this week.
BTW, In Phase 2, those same bondholders (now in the guise of PE funds) see themselves picking up returns on the NAMA assets of not less than 25% per annum.
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