Urgency but no panic for a midnight special

When news of the liquidation broke, Noonan knew he had to act quickly

Just before 4pm on Wednesday, the Department of Finance received separate calls from the Reuters and Bloomberg news agencies. Officials were asked to confirm a story that the failed Anglo Irish Bank, now operating as the Irish Bank Resolution Corporation (IBRC), was to be liquidated as part of the arrangement with the European Central Bank to ease the State’s punitive repayment burden on Anglo’s €28 billion promissory notes.

What the agencies had established was credible and true. The liquidation of Anglo was indeed a linchpin of the delicate formula being worked on. News of the potential liquidation of Anglo spreading like a virus on the wires posed an immediate risk to the assets of the bank. Minister for Finance Michael Noonan was well aware he needed to move quickly.

According to officials within the Department of Finance there was a sense of urgency but no panic. It was clear that the Government had not been blindsided by the development – a contingency plan for such an eventuality had been in place since last September.

Anglo assets

Noonan himself said yesterday that despite the image of Anglo as a “clapped-out” bank it still had €12 billion to €14 billion worth of assets to protect. He was not prepared to allow creditors or other parties to challenge, or try to prevent, a liquidation.

The liquidation plan was highly secretive. As Noonan disclosed yesterday, neither IBRC nor its chairman Alan Dukes was brought into the ring of confidentiality and were wholly unaware of the plan.

But the ECB and its satellites had been aware for months. There had been several “scares” in recent months, Noonan said, that a substantial leak was about to happen, but none had come to pass until this week.

The contingency plan was two-fold. A 58-page Bill to liquidate the bank was drafted and ready to go for many months. A senior partner from KPMG was on standby to go into IBRC at short notice.

Within 15 minutes the KPMG team was at IBRC headquarters informing Alan Dukes and the bank board that they must relinquish control. The Cabinet met in urgent session, one of a number of meetings Ministers held to pave the way for the emergency legislation.

From before 5pm rumours spread in Leinster House of emergency legislation.

President Michael D Higgins, who was on an official visit to Italy, was informed that he might need to be available to sign the Bill into law early yesterday morning. The Government jet was scrambled and the President left Italy for Ireland at 7.30pm.

By 6pm, the Government had confirmed informally that the Bill, the Irish Bank Resolution Corporation Bill, would come before Dáil and Seanad on Wednesday night.

The Cabinet met again at 9pm to formally approve the Bill. Noonan was scheduled to address the Dáil at 10.30pm but this was delayed to allow the Opposition to be briefed. When the Dáil convened for the special session at 11pm, it was delayed a further hour to allow Opposition TDs time to study the Bill and its impact.

Far-reaching Bill

When Noonan finally got to his feet after midnight, he outlined a Bill that was relatively straightforward in its powers but far-reaching in impact.

The Bill gave authority to appoint a special liquidator to take over the bank and also provided for all its assets to be sold or transferred to Nama. It also would extinguish the promissory notes and replace them with bonds.

The debates in the Dáil and Seanad followed a similar pattern with Fianna Fáil and some Independents supporting the measures in a qualified way, and the others opposing them. The main criticism revolved around 850 staff at IBRC being made redundant immediately, although Noonan said some would be retained for a period. The other line of attack was there was no evidence that the burden of debt was being reduced; rather its repayment schedule was being prolonged.

After just under three hours of debate in the Dáil, the Bill was passed by 113 votes to 35 just before 3am and referred to the Seanad.

The debate in the Seanad commenced at about 3am and was completed a little after 5.50am when the Upper House approved the legislation by 37 votes to six. In his final contribution at the end of an exhausting night, delivered after 5am to bleary-eyed Senators, Noonan hinted more strongly than before that the ECB might not make a final decision yesterday.

Enacted legislation

Having completed all stages, the Bill was sent by dispatch rider to Áras an Uachtaráin where the President signed it into law a little after 7am. Once the enacted legislation returned, Noonan signed orders to give effect to its most important provisions, finishing what had been a marathon night.

The Minister and his officials were dampening down expectations of the ECB board rubberstamping a done deal, with some suggesting it might take another two weeks. In retrospect, this seemed to be excessive caution. It was known that ECB president Mario Draghi wanted a unanimous rather than majority decision, and there was resistance from some central banks.

But when, shortly before 2pm yesterday, Draghi finally declared the confusing, but decisive, phrase that the ECB board had “unanimously noted” the move, the deal was essentially done. Within minutes the Cabinet was in session, allowing Taoiseach Enda Kenny to go into the Dáil after 3pm to outline the new deal.