Recapitalisation of IL&P a form of 'theft'

A DISSIDENT Irish Life & Permanent (IL&P) shareholder leading a campaign to limit investor losses in the group’s €4 billion recapitalisation has claimed it is “a form of institutionalised theft” in a letter to the Government and State authorities.

Piotr Skoczylas, managing director of Scotchstone, wrote to Minister for Finance Michael Noonan and Central Bank governor Patrick Honohan yesterday, claiming his campaign is supported by shareholders with more than 9 per cent of IL&P’s shares.

He argues that the Central Bank’s stress tests had resulted in an “artificially high capital requirement” which is 16 times higher than the capital bill set following last November’s stress tests.

Mr Skoczylas, who spoke against the recapitalisation at last week’s IL&P annual meeting, claims the company is not insolvent and will in fact be overcapitalised by the recapitalisation, a condition of the EU-IMF bailout.

“This recapitalisation may possibly turn into an inequitable huge transfer of wealth from the current IL&P shareholders to the Irish exchequer, which would have nothing do with protecting the Irish taxpayer,” he wrote.

His letter was copied to Taoiseach Enda Kenny, National Treasury Management Agency chief executive John Corrigan and secretary general of the Department of Finance Kevin Cardiff.

The capital target to be raised by IL&P will lead to the break-up of the group with the sale of Irish Life, which is estimated to raise €1.5 billion, leaving €2.5 billion to come from the Government. This will result in the company ceding control to the Government and the dilution or the wiping out of shareholders’ investments.