Tackling Anglo's toxic legacy leads to expanded role for Nama
Politically, both Kenny and Noonan noted that the liquidation of IBRC was important. The Taoiseach told the Dáil yesterday: “The remnants of Anglo Irish Bank and Irish Nationwide – stains on our international reputations and dents to our national pride – have now been removed from the financial and political landscape. Their closure bookends a tragic chapter in our country’s history.”
The 56-page legislation is clear in its purpose – the appointment of a special liquidator and the sale or transfer of assets to Nama.
Economist Dr Alan Ahearne yesterday suggested it removed an element of duplication as transferring €12 billion to €14 billion of assets from a wind-down bank to Nama made sense as it was the specialist agency already dealing with dozens of billions of euro worth of similar assets.
This process won’t be simple and the special liquidator appointed to the IBRC under the Act is required to have an independent valuation carried out of assets acquired by Nama from the bank. There may be some injustice along the way, and smaller developers finding themselves dealing with the behemoth that is Nama.
There is also the need for adroitness in the handover, especially with complicated and problematic cases such as that relating to Seán Quinn and his family.
Another political downside is the fact that about 1,000 people have lost their jobs in an abrupt and insensitive manner.
Central Bank governor Patrick Honohan said in Frankfurt yesterday that the Anglo Irish Bank episode was “horrendously damaging” for Ireland.
Asked why IBRC had to be liquidated, or whether it was an ECB condition for a deal, he declined to go into any further detail.
“The whole thing hangs together, one thing leads to another and that is part of the structure we have ended up with,” he told journalists.
He said the plan to liquidate IBRC was “part of the design from a long way back”.
“There were a number of options being considered but [liquidation] was there for some time,” he said.
Mr Honohan said it was necessary to design a structure that satisfied all in the euro zone and did “not take anybody out of their comfort zone”.
He insisted that replacing the promissory note with a long-term bond was not monetary financing, but merely ensuring the Central Bank of Ireland did not end up with “non-standard, non-tradeable” promissory notes.