Later this morning, the protesters of Ballyhea and Charleville will hold their 111th weekly protest march, starting from the library Plaza in Charleville at 11.30am, it will be the usual 15-minute march to highlight the billions of euros which have travelled via a circuitous route from our pockets to the Government to the banks, ultimately to the bondholders. The protest has certainly grown and there are now similar protests in Tralee, Killarney, Clare, Wicklow, Ratoath and Skibbereen. The sensitivity of the protesters who instinctively know that possession is nine tenths of the law when it comes to this money, our money, contrasts with An Taoiseach claiming that banks are paying bondholders “out of their own resources”
Two recent events have shown us just how much this State might have saved if these issues at the heart of these protests had been recognized by the decision-makers in government. In February 2013, we liquidated Irish Bank Resolution Corporation which will now see a small number of bondholders, estimated on here to be €100-200m burned, though it will also see credit unions losing €15m and Irish pension funds losing €1m. When this government came to power in 2011, there were nearly €4bn of senior unguaranteed bonds at IBRC alone, and practically all have now been 100% repaid. You might recall the protestations at these repayments, here was the scene in the Dail in November 2011 when a USD 1bn bond was being repaid at Anglo, Sinn Fein and most of the Independent deputies walked out in protest.
The second event was the bailout of Cyprus where we saw that Cyprus itself made the decision, rubberstamped by the Europeans, to burn depositors with deposits less than €100,000 even though they were guaranteed, though that decision was later reversed by the Cypriots themselves. We were also reminded that sovereign EuroZone countries still retain fiscal powers and can levy taxes, so we’re now scratching our heads as to why this Government didn’t introduce a 100% tax on unguaranteed senior bondholders when it came to power in March 2011.
In the Dail this week the Sinn Fein finance spokesperson Pearse Doherty asked Minister for Finance Michael Noonan to confirm the senior bondholders in Irish banks when he came into office and also why he didn’t impose large taxes on payments to such bondholders. Judge the responses below yourself, but they just appear to show how stupid we have been and how we have let billions slip through our fingers which we will be repaying for decades to come.
There are still some meaty bonds left at AIB, PTSB and Bank of Ireland but the bulk of the easier-to-burn bonds have been repaid. The Ballyhea protesters will shortly be updating their demands and focusing on the €25bn of sovereign bonds given to the Central Bank in February 2013 as part of the IBRC liquidation, but when the story of this phase in our State’s history is written, the Ballyhea protesters and those like them will be seen as prescient and engaged, contrasting with ignorant and incompetent government which could have liquidated IBRC in March 2011, and which could have used its sovereign fiscal powers to impose taxes on bondholders at other banks in receipt of bailouts.
Here are the parliamentary questions and responses
Deputy Pearse Doherty: To ask the Minister for Finance if he will provide an assessment of the overall cost to the State of the bailout of Permanent TSB; if senior bondholders had been wiped out in March 2011.
Deputy Pearse Doherty: To ask the Minister for Finance if he will provide an assessment of the overall cost to the State of the bailout of Anglo Irish Bank and Irish Nationwide Building Society, if senior bondholders had been wiped out in March 2011.
Deputy Pearse Doherty: To ask the Minister for Finance if he will provide an assessment of the overall cost to the State of the bailout of Allied Irish Banks and the Educational Building Society, if senior bondholders had been wiped out in March 2011.
Deputy Pearse Doherty: To ask the Minister for Finance further to Parliamentary Questions Nos. 179, 180, 188 and 227 of 26 March 2013, to which he, in part, responded the Eurogroup advised against this proposal, but it recognised that fiscal measures such as taxes and levies are matters for individual member states, whether in a programme of assistance of not, if he will provide an assessment of the benefit that would have flowed to the State if a 99% tax or levy had been imposed on senior unguaranteed bondholders in Anglo Irish Bank and Irish Nationwide Building Society from March 2011..
Minister for Finance, Michael Noonan: I propose to answer questions 219, 220, 221 and 250 together.
The Deputy will be aware that when this Government took office it attempted to enforce burden sharing with senior unguaranteed bondholders in particular institutions that were no longer core elements of the Irish financial system. Intensive discussions were held with our European partners and particularly President Trichet of the ECB in the run-up to the announcement of our stress tests on 31st March 2011. At that time the President believed that such action was not in the interests of Ireland or the Euro Area. This matter was discussed again with President Trichet on a number of occasions including the Ecofin meeting in Poland in September 2011.
The Central Bank of Ireland has advised me that as of 18th February 2011, the total unguaranteed senior debt issued by the covered institutions was €36,452m of which €20,039m was unguaranteed senior secured and €16,413m was unguaranteed senior unsecured (This information was published to the Central Bank of Ireland website in April 2011).
Within these figures, the amount outstanding at Anglo Irish Bank and Irish Nationwide combined was €3,748m (unguaranteed senior unsecured), while there was no senior unguaranteed secured notes in issue.
As the Deputy is aware, burden sharing was thus restricted to junior debt, which over the course of the crisis contributed over €15bn in capital to the Covered Institutions.