ANGLO IRISH Bank, which is to be nationalised next week, can take control of a significant percentage of the Seán Quinn group should it default on loans. Mr Quinn and his businesses are the largest debtor of Anglo Irish Bank, The Irish Timeshas learned.
The Quinn group is one of the State’s largest privately owned business operations. The Quinn family is the largest shareholder in Anglo Irish Bank.
Special preference shares over which the bank holds a charge allow it appoint a majority of the board of Quinn Group (ROI) Ltd, which in turn controls insurance businesses Quinn Healthcare and Quinn Direct as well as Quinn quarrying and concrete operations, property interests, glass, radiator and plastics manufacturing businesses. The Quinn group employs approximately 8,000 people.
The charge was taken out on July 9th, 2008, at around the time the Quinn family was purchasing a stake in Anglo Irish Bank equal to almost 15 per cent of its value.
As well as the preference shares, the bank also has a charge over 17.7 per cent of the A ordinary shares of Quinn Group (ROI) Ltd.
The Quinn Group has net assets of €3.4 billion and the bank would not be able to take ownership of the charged shares unless there was a default on the loans against which they are charged.
The Quinn family is understood to have lost close to €1 billion on so-called “contracts for difference” in Anglo Irish Bank shares. Loans advanced to the family by the group in relation to the investment have now been written off.
The bank is being nationalised in the wake of controversy over hidden loan dealings by the former chairman, Seán FitzPatrick, which have severely damaged the credibility of the bank.
There are also concerns about the bank’s exposure to the Irish commercial property market.
Next week legislation will be introduced to give effect to the Government’s decision to nationalise the bank.
The legislation will allow for the appointment of an assessor who will decide what value, if any, the bank has for the purposes of compensating its shareholders.
Taoiseach Brian Cowen, concluding an official visit to Japan, gave his first public response in Tokyo yesterday to the nationalisation.
“We have decided moving this bank into full public ownership is the right approach, is the correct decision in these circumstances. We are satisfied that we can see this bank continue on in its business as before,” said Mr Cowen.
The nationalisation of the bank prompted sharp declines in the share price of Allied Irish Banks (AIB), which lost 25.26 per cent and Bank of Ireland, which lost almost 17 per cent.
Banking sources said the decision to take Anglo into public ownership would make it more difficult for AIB and Bank of Ireland to raise €1 billion each as required under the State recapitalation scheme.
The cost of insuring Irish Government bonds against default spiked to record levels yesterday, suggesting global markets perceive the quality of Irish public debt to have worsened as a result of the nationalisation.