IBRC liquidation extended to avert 30% assets hit amid Covid

The liquidators of the remnants of Anglo Irish Bank and Irish Nationwide Building Society have extended their wind-up by a further two years to the end of 2024, as they estimate the sale of remaining assets in the current environment would result in a 30 per cent hit compared with values before the Covid-19 pandemic.

Irish Bank Resolution Corporation (IBRC), which took over the assets of the two failed lenders in 2011 and was put into liquidation two years later, had a remaining loan portfolio of about €3.4 billion at the end of last year, according to the liquidators' seventh annual update report.

However, that figure is based on the book value of the loans at the time of the liquidation and does not does reflect current market values. That makes it difficult to assess what the 30 per cent drop referred to in the report would equate to in monetary terms.

Some 57 per cent of IBRC's remaining loan and asset portfolio is exposed to leisure, a sector that has been particularly hit by the pandemic, according to the liquidators, Kieran Wallace and Eamonn Richardson of KPMG. Offices account for a further 24 per cent, while retail and industrial make up 17 per cent, and residential 2 per cent.

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Russia and eastern Europe account for two-thirds of the remaining loans and assets. Some of these are known to relate to the overseas property portfolio once owned by the family of businessman Seán Quinn.

“It appears that values will only begin to recover from 2022 on and will take two years from then to recover to 2019 levels,” the report said. The onset of Covid-19 initially prompted the liquidators last year to extend the wind-up by a year to the end of 2022, as the pandemic hit asset sales and delayed court cases in which IBRC is involved.

Final costs

Estimates for the final liquidation costs are also rising. The liquidators estimate that total liquidation fees will amount to between €320 million and €327 million by the time the work is completed. That’s up from a range of €291 million and €306 million forecast two years ago.

"This report highlights the ongoing impact which Covid-19 is having on some of the key aspects to delivering a successful winding up of IBRC," said Minister for Finance Paschal Donohoe in a statement as his department published the latest report, adding that pushing out the completion date "will allow the special liquidators to achieve the best possible return for the taxpayer on the remaining assets while also concluding the remaining legal cases which IBRC are party to".

Liquidation costs amounted to €16.4 million last year, bringing the total since IBRC was wound up in February 2013 to €293.8 million. KPMG’s fees have totalled €184.5 million to date, net of rebates, while law firms A&L Goodbody and Linklaters, the next biggest beneficiaries, have been paid €40.9 million and €20.3 million, respectively.

At the end of December IBRC remained party to 29 legal cases, comprising both defendant and plaintiff litigation – down from 50 in February 2020.

The collapse of Anglo Irish Bank and Irish Nationwide cost the State €34.7 billion when they failed in 2009.

The banking crash and subsequent economic crisis forced the government to seek a €67.5 billion international bailout from the European Union, the International Monetary Fund and the UK, Sweden and Denmark in late 2010.