Minister for Finance Michael Noonan said he took immediate action to secure the stability of the former Anglo Irish Bank and its assets of almost €14 billion on behalf of the State, once information about its proposed liquidation became public.
He said the Government has been in ongoing discussion with the European Central Bank to reach an agreed position to resolve the promissory note satisfactorily for all sides.
Introducing the Irish Bank Resolution Corporation Bill which gives effect to the liquidation of the bank, Mr Noonan said all employee contracts would be terminated on the winding up of the bank.
He said however the majority of the staff would be re-hired for the orderly liquidation "on such terms and for such duration as may be determined by the special liquidators".
Speaking to the Dáil at midnight the Minister said the ECB was considering a proposal from the Government as part of these ongoing discussions.
"In the discussions the first step was the winding up of the IBRC and the sale of its remaining assets to Nama or other market purchasers."
He said the net debt owed by IBRC to the Central Bank would be purchased by Nama using Nama bonds, "in a way that ensure there is no capital loss for the Central Bank."
Guarantee
The ministerial guarantee underpinning the net debt owed to the Central Bank would also be transferred to Nama. Eligible bondholders and depositors would be repaid under the deposit guarantee scheme and the eligible liabilities guarantee scheme.
When information about the proposed liquidation of Irish Bank Resolution Corporation was made public earlier yesterday "there was an immediate risk to the bank".
To stabilise it and protect assets of €12 billion, he vested powers of the board temporarily in an employee of KPMG and a KPMG team was now in control of the bank on his behalf.
He said the decision to liquidate IBRC did not affect other banks. The vast majority of IBRC deposit accounts moved to AIB and Permanent TSB last year and were unaffected by the announcement.
Deposit accounts retained in IBRC were generally associated with a wider ongoing relationship with the bank.
Fianna Fáil finance spokesman Michael McGrath said he was prepared on behalf of his party to take in good faith the Minister's reassurance that not passing the Bill exposed IBRC, and by extension the State, to substantial risk.
"I have no objection in principle to IBRC being wound up with immediate effect," he added. "But I do want you to reassure me, my colleagues and everyone in this House that the national interest has been fully protected in respect of the decisions we are making here tonight."
Mr McGrath said he wanted to object in the strongest possible terms about the manner in which the legislation had been handled. Leaks had emerged and it was clear from the Minister's statement that the Government had the matter on the agenda for some time.
Sinn Féin finance spokesman Pearse Doherty said the one clear thing from the debate was the Government's determination to pay every last cent of the debt.
"You're winding up the bank Minister but you're not winding up the debt," he said and he described the rush to legislation as "an affront to democracy" and to the citizens of the State.
