So just how much did the terrible twins – Anglo Irish Bank and Irish Nationwide – cost the State in terms of cash? We are getting closer to being able to put a precise figure on it, even if we are not there yet.
The State injected €34.8 billion into Anglo and Irish Nationwide in 2009 and 2010, more than half of the total cost of the entire bank bailout. When it liquidated the Irish Bank Resolution Corporation (IBRC), into which the two companies had been merged, it took the risk that after the sell-off of its assets, a further hole would appear. The risk was increased by a €1.1 billion Government loan to IBRC to meet the cost of paying depositors covered by the State guarantee and due repayment after liquidation.
The IBRC liquidators have repaid all the money advanced through Government-guaranteed bonds when the liquidation was put in place, which means the sell-off of assets has not led to any further hole appearing.
We also now know that the IBRC will be able to repay the €1.1 billion loaned by the State to meet the deposit guarantee. So, barring some major cost appearing from litigation against the IBRC, the State bill cannot rise any further. In fact, it is likely that there will be some funds left after all the creditors and costs are paid, which will go back to the State, meaning that the final cost will be a bit lower than the €34.8 billion where we started.
It is hard to calculate exactly, but the €1.85 billion in cash now held by the liquidators, Kieran Wallace and Eamonn Richardson of KPMG, should cover all the main unsecured creditors and also repay the €270 million due to former junior or subordinated Anglo bondholders.
However, the liquidators still have some €3.5 billion of assets to sell, including a controlling interest in a swanky hotel and apartment complex called the Mandarin Oriental in Boston and assets linked to loans given to Seán Quinn, whose family is engaged in a major legal action with IBRC.
It is hard to know what will crystallise from this €3.5 billion and how it would balance against court actions. However, it is likely that there will be some payback to the State, thus knocking perhaps up to €1 billion off the cost of the terrible twins.
It may not be much consolation, of course, if it all ends up costing up €34 billion, rather than €34.8 billion, particularly when the wider costs to the economy and society are simply incalculable.
