Minister for Finance Michael Noonan is so far resisting the release of the unaudited accounts for Irish Bank Resolution Corporation for the year ended 31st December 2012, so the best we have at present are the interim IBRC accounts for the six months ended 30th June 2012. Below is the balance sheet.
For you non-accountants, the balance sheet at 30th June 2012 doesn’t look too bad. There are net assets of €2.7bn, and that is after IBRC has booked over €10bn of provisions for losses on its €27bn of loans. Yes, only 30% of IBRC’s loans are performing but IBRC is also receiving interest on the promissory notes, so you might have expected IBRC to be breaking even on its operations.
But no, not only is the Department of Finance saying that the €2.7bn of net assets at 30th June 2012 have been wiped out, but the Department is saying that IBRC will need an additional €1bn of capital in 2013 to cover losses from the Eligible Liabilities Guarantee – that’s where bonds and depositors were guaranteed from December 2009 until mid 2013.
IBRC is set to be finally wound up in August 2013, so that means that in the space of just 14 months, it has made a loss of €3.7bn.
How on earth is it making such a loss? Was there gross mis-reporting at 30th June 2012? Has there been a massive fraud? At this stage of the property market cycle, hasn’t most of the bad news come out, so for IBRC whose main loans are still property related, how on earth is it now expected to make such a colossal loss? Remember NAMA is expecting to deliver a profit in 2012 and 2013, and NAMA has a larger loan book.