ANALYSIS:Plans to freeze €20m deposits held by major Anglo Irish Bank debtors is removed from Bill, writes Colm Keena

A PROPOSED restriction that would prevent persons or companies that owed Anglo Irish Bank more than €20 million from reducing deposits with the bank below that figure, was dropped by the Minister for Finance, Brian Lenihan, after advice was received that it would be disruptive for the bank and its customers.

Advisers to the Minister told him it might act as a disincentive to further deposits, and might cause people to remove money from the bank.

It was also said the measure might create an administrative burden for the bank. There was legal advice to the effect that the measure could create difficulties. The measure will be removed from the Bill that is to be presented to the Oireachtas today.

The reasons for inclusion of the measure were obvious. Anglo has a relatively small number of debtors, most of whom have very substantial loans. Some or many of these people are also likely to have large sums on deposit with Anglo. The idea, for instance, of large withdrawals by a customer in arrears on repayments whose loans were issued to pay for projects that are now unlikely to succeed, is a troubling one. However, the Minister appears to have decided that, on balance, it was best not to try to be too heavy-handed.

The Bill to be discussed today provides for the appointment of an assessor who will decide on the value of Anglo Irish Bank as of last Thursday, for the purpose of deciding on what compensation, if any, shareholders should be entitled to.

The assessor, to be appointed by the Minister, can receive submissions from the Central Bank, the Minister, a person appointed by the assessor to represent a class of persons whose shares are affected, a shareholder who is not represented by such a representative, and any other person whom the assessor might invite to make a submission, the Bill states.

In deciding on the value of the bank, the Bill instructs the assessor to have regard to certain matters including the “underlying market values of Anglo Irish Bank’s assets and the extent of its actual, contingent and prospective liabilities” as of last Thursday.

It also states that the assessor should assume no financial assistance would in future be provided to the bank by the State when deciding on the value.

The Bill states the assessor should have reference to a range of matters, including whether the bank was likely to have been able to continue as a going concern, information not publicly known but which, if publicly known, would have affected decisions to invest in the bank, and any other evidence the assessor obtains in the course of his or her work.

The Bill expressly states that nothing in it will prevent the assessor from deciding that the amount of compensation due to shareholders is nil. The assessor will report to the Minister, who will publish the report “as soon as is practicable”, the Bill states.

Appeals can be made to the Irish Financial Services Appeals Tribunal, the decision of which is final. Applications for a Judicial Review must be made within three months of the report being given to the Minister.

The assessor will, under the act, have the power to call a witness or order production of a document.