Anglo bondholders to get all their money in €270m payout

Group owed €270m refused to share failed lender’s losses, despite Government pressure

Taxpayers committed €29.3 billion to Anglo and €5.4 billion to INBS during the financial crisis, and face a minimal recovery on this, if anything. Photograph: Bryan O’Brien/The Irish Times

Taxpayers committed €29.3 billion to Anglo and €5.4 billion to INBS during the financial crisis, and face a minimal recovery on this, if anything. Photograph: Bryan O’Brien/The Irish Times

 

A group of Anglo Irish Bank junior bondholders, who resisted attempts to make them share the failed lender’s losses, are set to recoup all that they are owed.

And many junior bondholders will be paid back the full value of bonds they bought during the crisis at deeply discounted prices.

Anglo merged with Irish Nationwide Building Society (INBS) in 2011 and was renamed Irish Bank Resolution Corporation (IBRC), which was put into liquidation two years later. Taxpayers committed €29.3 billion to Anglo and €5.4 billion to INBS during the financial crisis, and face a minimal recovery on this, if anything.

IBRC’s liquidators revealed on Tuesday that senior unsecured creditors will receive the remaining 50 per cent of what they are owed in the coming weeks, having recovered an initial 50 per cent in the past two years. The State is IBRC’s biggest creditor in this category, owed €1.2 billion.

Recover

The liquidators also said the State stands to recover some more money in time, “following repayment of other creditors, including subordinated bondholders”. They did not indicate amounts or timeframes.

While most subordinated, or junior, Anglo bondholders agreed in 2010 to accept 20 per cent of what they were owed, after the Government threatened to inflict bigger losses on them, a group of such creditors, owed almost €270 million, refused to cave in.

One investor, Munich-based Xaia Investment, owed €17 million, took its case to the UK High Court and won.

Contentious

News that the holdout junior bondholders are in line to receive all of what they are owed is politically contentious. The then taoiseach Enda Kenny said in December 2014 that he saw no prospect of junior IBRC bondholders being repaid, while his then tánaiste Joan Burton insisted months later that the Government would use “all the legal means at our disposal” to resist such an event.

A Department of Finance spokesman said on Tuesday the Attorney General’s office concluded that withholding junior bondholders’ repayments would not stand a constitutional challenge.

“These bondholders correctly called the bluff of the last Fine Gael/Labour government, who let off a lot of hot air about not repaying these bondholders,” said Fianna Fáil finance spokesman Michael McGrath.