Debt deal would see IBRC liquidated if agreement secured from Frankfurt
Liquidators will be appointed to the Irish Bank Resolution Corp, following the introduction of emergency legislation in the Dáil shortly after midnight by Minister for Finance Michael Noonan.
The legislation was drafted as part of a deal with the European Central Bank (ECB) that will result in a major improvement in the terms of Ireland's bank debt. The ECB's governing council will discuss the deal today at its monthly meeting in Frankfurt.
Mr Noonan told the Dáil he would have preferred to introduce the Bill "in tandem with a finalised agreement with the European Central Bank. However, I understand that the European Central Bank will continue to consider the proposals made by the Irish Government tomorrow".
He said that because information relating to the proposal was made public, he had to take immediate action to secure the stability of the bank and the value of its assets on behalf of the State. "To this end, I vested the powers of the board temporarily in an employee of KPMG and a KPMG team is now in control of the bank on my behalf."
When the legislation is passed, joint special liquidators will be appointed to IBRC - formerly Anglo Irish Bank - with immediate effect to wind up its business and operations.
"It is intended that the net debt owed by IBRC to the Central Bank and its associated floating charge security will be purchased by Nama, using Nama bonds, in a way that ensures that there is no capital loss for the Central Bank," he said.
He added that the ministerial guarantee underpinning the net debt owed to the Central Bank would be transferred to Nama and that eligible depositors, bondholders and counterparties would be repaid.
The IBRC began life in July 2011 after the business of Irish Nationwide Building Society was transferred to Anglo Irish Bank Corporation Limited.
Mr Noonan said he understood the announcement would come as a shock to employees of IBRC and to some of those who do business with the bank.
"Unfortunately, as is common in liquidations, all employee contracts will be terminated on the winding-up of IBRC. However, it has been indicated to me that the majority of staff will, if they wish, be re-hired for the purposes of the orderly liquidation on such terms and for such duration as may be determined by the special liquidators."
The general secretary of the Irish Bank Officials Association, Larry Broderick, said earlier that IBRC employees were "fearful that they may be overlooked completely or at best regarded as 'collateral damage' ". He said that he was seeking urgent meetings with the Minister for Finance and with the liquidators, KPMG.
Mr Noonan said employees would rank, in the normal way, as preferential creditors .
The Minister said the decision to liquidate IBRC would not affect other banks. "In the case of IBRC, the vast majority of IBRC's deposit accounts moved to AIB and Permanent TSB last year and they are unaffected by today's announcement.