Just don't mention the 'A' word

Aynsley feels that as the Government now has an asset recovery vehicle in IBRC, it should be used to purge more bad or loss-making loans from the other banks, allowing those lenders “to present a cleaner face to the market” to hasten their recovery.

However, he feels such an idea is being discounted because of the public desire to obliterate what was formerly Anglo Irish Bank from the Irish banking landscape.

“There is a very good expression that is used in multiple situations – don’t throw the baby out with the bathwater. People are distraught because of what has happened. The easiest thing is just to kill it off,” says Aynsley.

Aynsley believes unprofitable tracker rate mortgages are best left with the other banks deemed by the Government to have a future. While they are a drag on profits, Aynsley believes the banks should retain these customers as they are “still good relationships”.

“The tracker mortgage as a product would be classified as non-core, but the banks would classify the customers as core,” he says.

Aynsley believes there is another model to be looked at to deal with tracker mortgages, which total about €52 billion at Bank of Ireland, AIB and Permanent TSB. “They can either be ring-fenced within those organisations or they could set up a structure that makes sense [in which] to ring-fence them and keep them with the client relationship,” he says.

IBRC could alternatively be used to take over commercial loan books from the “non-core” divisions of the other Irish banks.

Where loss-making loans at the other banks may end up will form part of the next restructuring of the banking sector in the autumn.

As for its own business, IBRC’s most high-profile work at present is recovering the €2.88 billion of debt racked up by businessman Seán Quinn, mostly to cover losses on his gamble on Anglo’s shares in the crash of 2008. That collapse, along with the public scandal over Seán FitzPatrick’s hidden loans, collapsed the bank in January 2009.

Aynsley says that, contrary to Quinn’s view that Anglo wrecked his business, the evidence emerging in the courts about Quinn Group and Quinn Insurance shows that “it was not always as it was cracked up to be in the Quinn camp”.

“The additional weight of the gambling losses that Seán Quinn himself levied on the Quinn Group . . . really was what pushed the business to the brink,” he says.

“You can’t take any business which is a good business and then independently go off and produce huge gambling losses and expect that good business to pay off all of the gambling losses. It doesn’t work that way – you will stress the business to the point where it won’t survive.”

Again, contrary to the views expressed by the Quinns, Aynsley says the bank has “not been able to get to the point where we can see a constructive and consensual way of working together for the benefit of the Irish taxpayer”.

He accuses the family of being “somewhat economical with the truth” when they claim the bank is unwilling to co-operate with them, but he declines to elaborate.

With one of the Quinns in jail for contempt of court, Aynsley says the bank will continue fighting legal actions to recover as much of the €2.88 billion in debt as it can, although IBRC’s provisioning levels show it expects to write off more than €2.3 billion.

“We will go as far as we need to to get the money back. I keep on saying this – this is nothing about being vindictive, this is doing the job that we need to do,” he says.

Aynsley declines to comment on how the bank will fight the family’s legal claim – that they do not in fact owe €2.34 billion of the debt because the loans were unlawfully advanced to prop up the bank’s own share price – if three former executives, including FitzPatrick, are found to have illegally loaned out money to buy shares in criminal prosecutions being taken by the State.

He says some of the bank’s own civil actions against former executives may no longer be worth pursuing from a commercial point of view given the cost involved, but fighting cases against former directors was a matter for the Minister for Finance, the bank’s owner.

“Ethically, I think it is very important that we continue with it. You reach a commercial point with some of these actions where, commercially, you should walk away. That is not our call then. That is the public interest call that the Minister will make – whether he wants to spend more money and litigate to make a point,” says Aynsley.

Another difficult area where IBRC is the subject of scrutiny is in its relationship with big borrowers such as Paddy McKillen and Denis O’Brien, and their travails outside the bank with business rivals (in McKillen’s case) and a tribunal of inquiry or potential bidders for businesses (in O’Brien’s).

Text messages sent by Aynsley to McKillen emerged in the case taken by the Belfast-born businessman in his legal battle with the Barclay brothers over the Maybourne luxury hotels in London.

The bank refused to sell part of McKillen’s debt secured on his shares in the hotels to the brothers for 100 cent in the euro, as it might jeopardise its ability to recover the full value of more than €1 billion worth of debt from the businessman and related companies.

Aynsley says the Barclays side have tried to blow the text messages out of proportion in an attempt to manipulate the bank into selling the loans to them to help them get control of the hotels.

The texts, in which Aynsley told McKillen the bank would be supporting him and not selling his loans to the Barclays, were appropriate, he says, “because he [McKillen] doesn’t email” and the bank needed to inform him quickly that the bank would work with him.

“The Barclay brothers have an agenda. Their agenda is to get the hotels. If they can play the divide-and-rule game, they will. They will try and compromise us and put us in a position where they pick up his loans cheap.