State pays EBS €25 million as part of 10-year promissory note agreement
Payment of promissory note subject to legal challenge from TD Joan Collins
The €25 million payment to EBS matched those made in 2012 and 2011. Photograph: Brenda Fitzsimons
The Department of Finance yesterday paid the third instalment of a €250 million promissory note issued to EBS Building Society three years ago. The €25 million payment matched those made in 2012 and 2011.
The promissory note was one element of the State’s bailout of EBS to prevent its collapse. On June 17th 2010, the then Minister for Finance Brian Lenihan issued a €250 million promissory note to the institution, payable in equal instalments over a 10-year period.
The note was part of an €875 million injection of capital by the State into EBS in 2010 to bolster its core tier 1 ratios to meet Central Bank of Ireland requirements.
The building society’s capital position had weakened due to impairments on land and development assets transferring to the National Asset Management Agency, and other impairments.
In March 2011, the current Minister for Finance, Michael Noonan, announced that EBS would merge with AIB to form one of two pillar banks in the country. The combined entity is 99.8 per cent owned by the State.
The payment of the EBS promissory note has been challenged by People Before Profit TD Joan Collins. Earlier this month it was decided that a three-judge divisional High Court would be convened in the autumn to hear this case.
Ms Collins has claimed that the promissory note is “unconstitutional and unlawful” because the Government appropriated public monies without putting it to a vote of the Dáil.
The Dublin South Central TD had sought to stop the payment of yesterday’s tranche of the promissory note.