Cantillon: Siteserv issue could have been avoided

Former IBRC chief executive Michael Aynsley mounted a strong defence of his stewardship of the bank-cum-national car crash over the weekend.

One of his points – delivered via a very long newspaper interview – was that if the Government was going to investigate deals and writes-offs at the former Anglo, it should also do the same at Nama and AIB.

Comparisons to Nama are something of a red herring in all but one respect. At the heart of the controversy is the decision of the IBRC board to sell Siteserv to Denis O'Brien for €45 million, representing a €110 million writedown of the company's debts.

It subsequently emerged that Department of Finance officials were unhappy with the deal and with some aspects of Mr Aynsley's wider stewardship of the bank.

If IBRC had been subject to the same governance regime as Nama, the issue would not have arisen. Nama is not allowed to sell assets to its “clients” unless they have repaid their existing debts in full.

Mr O’Brien was still a debtor of IBRC at the time of the Siteserv deal and thus would have been excluded from the process.

He has since refinanced his borrowings, which at one stage were more than €800 million.

The rationale behind the Nama rule was that it would be unacceptable for the people who contributed to the mess that was the property collapse to benefit from a taxpayer-funded resolution.

Given that Mr O’Brien was not responsible for Anglo’s difficulties, some might consider a similar governance rule to be unfair on him and other performing borrowers.

According to Aynsley the bank took the view that borrowers could bid.

However, in hindsight it would have saved everybody – including Mr O’Brien – a lot of trouble if he had not been able to buy assets until he cleared his loans first.