STATE-OWNED Anglo Irish Bank consulted Minister for Finance Brian Lenihan on the bank’s plan to reduce the “significant” debt owed to the bank by businessman Seán Quinn and his family.
Anglo chief executive Mike Aynsley wrote to Mr Quinn in February – in a letter seen by The Irish Times– saying that he would discuss a proposal to reduce the family's debts with Mr Lenihan.
The Quinn family owes Anglo in the region of €2.8 billion.
Under the relationship framework between the bank and the Minister, Anglo is run on a commercial basis at arm’s length from the Government and the commercial relationship between Anglo and customers is left to the bank.
A spokesman for Mr Lenihan said: “The Minister for Finance is kept updated on key issues in relation to Anglo Irish Bank. These updates are fully in accordance with the relationship framework.”
Mr Lenihan can intervene to protect the public interest or ensure Anglo is following the business plan which complies with the Minister’s objectives for the bank.
The bank had no comment.
The Minister has not intervened in the bank’s handling of the Quinn case but has been kept abreast of its dealings with Mr Quinn and Anglo’s plans to reduce the family’s debts.
Sources close to Mr Quinn said that he outlined in a meeting with Mr Aynsley on February 19th the group’s three-year business plan to address Anglo’s concerns about the debts owing by the family.
“We will be discussing your proposal with our shareholder along with other scenarios for the management of our relationship and the proactive management of the current and significant levels of debt,” said Mr Aynsley in his letter to Mr Quinn dated February 26th, 2010.
The bank is considering a range of options to reduce its loans to the Quinns, including the possibility of swapping debt for a stake in the Quinn Group or taking warrants giving the bank a stake in future.
Mr Lenihan was consulted as the Quinn Group is one of Ireland’s largest firms, employing 5,500 people and has a significant share of the insurance market which may have implications for Anglo’s restructuring of the loans.
Anglo also advised Mr Lenihan on its talks with Quinn as the bank’s proposals could involve taking an interest in a regulated entity such as Quinn Insurance.
Mr Aynsley told Mr Quinn that he enjoyed their meeting and that it allowed him to “express views as to how the current relationship needs to be managed for the benefit of all parties: the company, the bank and our shareholder”.
He said that a syndicate of banks and bondholders would “take comfort” from a review of the group’s operations by accountants KPMG “while deliberating the renewal of current facilities”.
The banks and bondholders, which are led by UK bank Barclays, are owed about €1.2 billion by the Quinn Group and talks are ongoing on the refinancing of this debt before it matures in October.
Mr Aynsley said he welcomed Mr Quinn’s offer of further meetings “as it will be necessary for all parties to move forward over the next weeks”. He concluded: “I shall be in touch following my planned meeting with our shareholder to drive this process forward.”
Guarantees totalling €1.2 billion provided by Quinn Insurance subsidiaries to cover Quinn Group’s debts prompted the Financial Regulator to seek the appointment of provisional administrators in the High Court earlier this week.
The group has said that it would reduce its debts by €400 million over the next three years and that it “has committed, and is on schedule, to pay back all monies borrowed to date”. The group listed the figures in a letter to Government this week in which it lobbied to have the administrators withdrawn.
