FEES PAID by the Government and the Financial Regulator to outside consultants for advice sought since the banking crisis began in the autumn of 2008 have risen to well in excess of €17 million.
The Department of Finance has disclosed that some €1.4 million has been paid to investment bank NM Rothschild this year for financial advice on resolving the problems within the banking sector.
This brings the total sums paid by the Government to investment banks for financial advice during the banking crisis to €8.7 million.
In addition, more than €8.5 million has been paid to legal advisers Arthur Cox, accountants PricewaterhouseCoopers and estate agents Jones Lang LaSalle for advice provided to the department, the regulator and the National Treasury Management Agency (NTMA).
The NTMA, which now oversees the Government’s banking strategy, paid Rothschild fees of €583,000 plus VAT of €125,400 last January and made a further payment of €583,333 plus VAT of €122,500 in April. The fees were disclosed by the department under a Freedom of Information request submitted by The Irish Times.
While the fees are paid by the NTMA, Rothschild provides advice to the department and the agency.
The money paid to Rothschild is on top of €7.3 million in fees paid to Merrill Lynch, which provided financial advice during the crisis between September 2008 and June 2009 before losing the contract to Rothschild last summer. Merrill Lynch had been hired in 2008 without the contract going out to public tender as the pace of the financial crisis forced the Government to act quickly to seek external financial advice.
In addition to fees paid for financial and banking advice, some €3.9 million was paid to Arthur Cox from September 2008 to June 2009 for consultancy work on the State bank guarantee, the nationalisation of Anglo Irish Bank and the recapitalisation of Allied Irish Banks (AIB) and Bank of Ireland.
On top of the €17 million total, the Government earmarked €3.1 million for legal advice for the remainder of 2009 and €3 million for 2010, according to a reply last September from Minister for Finance Brian Lenihan to a Dáil question tabled by Labour finance spokeswoman Joan Burton.
The regulator also paid €3.8 million to PricewaterhouseCoopers for assessing the capital requirements of the banks and €840,000 to Jones Lang LaSalle for financial and property advice.
Fees paid for wide-ranging banking advice to the Government is in addition to lucrative contracts awarded by the National Asset Management Agency (Nama) to Arthur Cox, PricewaterhouseCoopers and UK bank HSBC.
A spokesman for the department said it has admitted it lacked sufficient in-house expertise to cope with the financial crisis. He added that the National Pension Reserve Fund received “arrangement fees” of €30 million each from AIB and Bank of Ireland from last year’s €7 billion recapitalisation of the two biggest banks.
