merrion street

Finance Minister Michael Noonan addressed the Dail on the issue of the Irish Bank Resolution Corporation Bill.

As many Deputies will have noted from this evening’s media commentary, the ECB is considering a proposal from the Government as part of these ongoing discussions. In the discussions with the ECB it was envisaged that the first step would be the liquidation of IBRC and the sale of its remaining assets to NAMA or other market purchasers.

As soon as the information relating to the proposal to liquidate IBRC was made public, there was an immediate risk to the bank. Given this position, I as Minister for Finance, took immediate action to secure the stability of the Bank and the value of its assets, valued at €12 billion, 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.

Minister Noonan continued:

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. The Ministerial Guarantee underpinning the net debt owed to the Central Bank will also be transferred to NAMA. Eligible depositors, bondholders and counterparties will be repaid under the Deposit Guarantee Scheme and Eligible Liabilities Guarantee Scheme. There is also a Derivatives Guarantee in place. As is common in liquidations, all employment contracts in IBRC are immediately terminated, but the Special Liquidators have indicated that the majority of staff are likely to be re-hired to assist in the liquidation on such terms and for such duration as the Special Liquidators may designate.

The decision to liquidate IBRC is unique to IBRC and does 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. Deposit accounts that were retained in IBRC are generally associated with a wider ongoing relationship with the bank. It is important to state that all eligible deposits up to €100,000 for an individual and €200,000 for two individuals holding a joint account in IBRC are protected by the Deposit Guarantee Scheme in operation in the State and eligible deposits beyond this limit are guaranteed under the Eligible Liabilities Guarantee Scheme.

On the impact of staff of the IBRC, Minister Noonan said:

I want to acknowledge, with much appreciation, the significant efforts the directors and staff of IBRC have made to the stabilisation of, and maintenance of value in, IBRC. I regret the abruptness of how this decision is communicated to the management and staff, but due to the scale, sensitivity and complexity of the economic issues involved, it was necessary in the public interest to keep the matter confidential until now.

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. Employees will rank, in the normal way, as preferential creditors ahead of NAMA and unsecured creditors in respect of certain amounts owing on a winding-up, including accrued wages, salaries, holiday pay, sick pay, statutory redundancy, pensions contributions and claims for damages arising from accidents.

Minister Noonan concluded:

I would have preferred to be introducing this 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.

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