Data show 40% of IBRC loans paid less than 2% interest

IBRC’s commercial loan book carried exceptionally low rates of interest on borrowings when the special liquidator was appointed to the bad bank, new figures reveal.

Around 40 per cent of the €22 million loan book was subject to interest of less than 2 per cent per annum at that time, Fianna Fáil finance spokesman Michael McGrath said, citing figures released by the Department of Finance.

It appears that larger-scale borrowers were benefitting disproportionately as this €9 billion-plus was held in just under 20 per cent of the commercial accounts held by IBRC.

The data was released by way of an answer by Minister of Finance Michael Noonan to a written Parliamentary Question.

The figures show that holders of just 5 per cent of all commercial borrowings was paying interest of 4 per cent or more annually. Nearly three-quarters of the value of all commercial loans held by the “bad bank” was charging an interest rate of less than 3 per cent.

“These figures provide us with a good overview of the €22 billion of loans owed to IBRC when the special liquidator was appointed in February 2013,” said Deputy McGrath.

"On the face of it, the interest rates seem to be extraordinarily low and it will need to be established whether these rates relate to historic loan agreements entered into by the old Anglo Irish Bank or whether they reflect decisions made by management since the bank was nationalised in 2009."

IBRC, the “bad bank”, which housed the remains of Anglo Irish Bank and Irish Nationwide, was placed into special liquidation in February as the Government sought to manage the State’s national debt.

“Many mortgage holders paying over 4 per cent or 5 per cent on loans, and SME owners paying 7 per cent or 8 per cent on commercial term loans will view these IBRC rates as mouth watering.

“People will need to be reassured that appropriate interest rates were being charged at all times to all borrowers including in situations where loan extensions were being granted,” Deputy McGrath said. “ It could well be that most of these loans relate to arrangements entered into by the former Anglo Irish Bank whereby the interest rate was linked a European reference rate but this needs to be investigated thoroughly.”

A small number of loans was subject to interest of less than 1 per cent. The special liquidators stated that these “primarily related” related to distressed loans that were either restructured or where the borrower was in liquidation or administration “and the prospect of any future recovery was remote”.

Deputy McGrath said he was referring the information to Mr Justice Daniel O’Keeffe who is chairing the Commission of Investigation into IBRC and whose brief includes examining whether any preferential interest rates were extended to certain borrowers.