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Roundup-Anglo is gone, no tears from Ire

Thursday, February 07 08:21:31

The Government needed a more permanent solution to reduce the costs of IBRC which it inherited from Anglo.

Removing the signs from above the doors and putting the bank into a gentle, long-term wind-down wasn't enough - the former Anglo Irish Bank had to be liquidated.

The surprise announcement of the Government's decision to liquidate State-owned Irish Bank Resolution Corporation, the undertaker bank burying the corpses of Anglo and Irish Nationwide over time, was made to reduce the annual cost of the country's most diseased lenders. It is estimated that the move could shave about E1 billion off the yearly bill.

The promissory note structure may have been a smart idea once. Typing a note on a letterhead with the Irish harp through which the State promised to pay E31 billion of the E34.7 billion cost of the banks over time deferred the need to come up with all that cash all at once.

It was one of only a few rapidly diminishing options available to the State almost three years go, before the EU-IMF bailout. At the time the State didn't have the cash to pay for two of the world's worst lenders - E29.3 billion for Anglo and E4.5 billion for Irish Nationwide.

The catalyst for the latest move - and what could be the very final move against the former Anglo Irish Bank in a long line of late-night emergency measures taken to deal with this delinquent bank - was the annual cash call on the promissory notes.

The Irish Times

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Liquidation is the formal means by which companies are wound up and any proceeds distributed to creditors and shareholders.

Basically, the process involves the liquidator taking control of the business, realising the assets, paying off the creditors in order of preference, and then distributing what's left to the shareholders.

However, the reality is that the vast majority of companies that are liquidated every year in the Republic are insolvent. That is, they cannot pay their debts, so there is often nothing left for shareholders and some groups of creditors.

Liquidators realise whatever assets are available, and distribute the proceeds to creditors.

Those with security over the company's assets, generally banks or finance institutions, are paid first.

These are followed by preferential creditors, mainly workers and the Revenue Commissioners.

Unsecured creditors, almost always other businesses that have been supplying the liquidated company, are paid last. In the case of insolvencies, they frequently get nothing or a tiny percentage of what they are owed.

Where a company is insolvent, the Department of Jobs, Enterprise and Innovation's social fund pays most of the workers' entitlements and then takes over their claims.

The Irish Times

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IN another blow to the Irish stock exchange, energy conglomerate DCC confirmed that is still considering moving its listing to London and cancelling its Dublin listing.

Such a move would be another nail in the exchange's coffin.

Greencore recently did the same thing.

DCC said in a statement that most of its development activity and expenditure over the past two decades took place outside Ireland. Three quarters of the shares are also held by foreign investors.

"The company will remain incorporated, headquartered and tax resident in Ireland," DCC added.

In a statement, the company said sales and operating profits in the three months to the end of December were "well ahead" of the previous year.

Shares in DCC rose as much as 2.4pc this morning after the announcement.

The Irish Independent

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EQUITIES have had, by some measures, their best January in more than a decade. Signs point to cash coming off of the sidelines as an important supporting factor.

Global stocks are up almost 5pc for the month and the Standard & Poor's 500 Index posted its best January since 1997.

Meanwhile, flows of money into equity funds and ETFs have been strong, while cash has drained out of major banks and money market accounts.

Central banks have worked hard for the past four years to entice worried investors and businesses to put their cash back to work, but with only limited success.

Central banks have cut rates while at the same time buying up assets, especially government debt. The net result is very low deposit or short term rates. The Irish Independent