IBRC in talks to take on home mortgage porfolios

THE IRISH Bank Resolution Corporation (IBRC), which is winding down Anglo Irish Bank and Irish Nationwide, has said it is in talks that could lead to it taking on residential mortgages from other banks.

Confirming for the first time that IBRC may take on non-core assets from other lenders, the bank said the talks were centred on repairing the financial system to allow banks to lend again.

“The discussion has been that if this did happen – and it is by no means certain – these would include residential mortgage portfolios in the main,” IBRC chief executive Mike Aynsley said. Unless other banks became profitable again, they were not going to be able to provide credit, he said.

There were “a lot of assumptions the Government hasn’t worked through in this equation”, he said. “They are still at the very early stages, as we understand, in their discussions with the troika.”

The Government authorities are discussing moving bad loans and loss-making tracker rate mortgages from State-controlled AIB and Permanent TSB to IBRC.

Mr Aynsley was speaking as the State-owned bank posted a loss of €873 million for 2011, compared with €17.6 billion the previous year. The bank set aside €1.64 billion to cover losses on bad loans, as it estimated that the property market had fallen by 65 per cent.

Some €17.8 billion, or 61 per cent, of IBRC’s loans were impaired at the end of 2011, up from 48 per cent a year earlier.

IBRC’s losses include €214 million on the transfer of its deposits, bonds in the National Asset Management Agency and shares in its Isle of Man subsidiary to AIB.

Mr Aynsley said he still expected the final bill for rescuing the former Anglo Irish Bank to come in at between €25 billion and €28 billion by 2020, the deadline by which the bank must wind down its operations in full.

IBRC’s borrowings from central banks stood at €42.2 billion at the end of last year, including €40.1 billion drawn in emergency loans from the Irish Central Bank.

This represented 87 per cent of the bank’s funding following the transfer of its deposits to AIB.

The bank shed €17.4 billion worth of assets last year, including the sale of most of the bank’s US loan book and the transfer of €12.2 billion of senior bonds to AIB.

Mr Aynsley said the disposal of Irish and UK loans at acceptable prices “remains challenging”.

Staff costs fell by 8 per cent last year, with employee numbers falling 11 per cent.

IBRC said its workforce stood at 1,219 at the end of last year but was expected to fall to 850 employees by the end of this year.

The bank incurred exceptional costs of €82 million and €108 million on administrative costs of €108 million spent on professional fees as the bank fights legal cases, including the high-profile action against businessman Seán Quinn.

PAY PACKAGE IBRC CEO TAKES 11% DROP

IRISH BANK Resolution Corporation chief executive Mike Aynsley received a pay package of €866,000 for 2011, which was down from €974,000 the previous year, a reduction of 11 per cent.

His pay comprised a salary of €538,000, a contribution of €125,000 to his pension and “temporary allowances” of €203,000, the State-owned bank said.

The allowances for Mr Aynsley comprise “temporary relocation assistance which includes rent, travel and other agreed expenses”, the bank said in the annual report.

He moved from Australia to Ireland to take up the role of chief executive of what was then Anglo Irish Bank in September 2009.

Mr Aynsley told reporters he believed the pay was “good value for money for the taxpayer”. He said his pay would fall further to €750,000 this year as his temporary allowances will reduce again.

These allowances have fallen from €294,000 to €203,000 and they would fall to €80,000 for this year, he said. His salary, benefits and pension contributions will remain the same this year. “From a personal perspective, I wouldn’t have been able to come to this country to do this job without these allowances,” said Mr Aynsley.

The temporary allowances were not intended to be ongoing, he said, and they “drop away” from September, which will mark his third year in the job. “I am really grateful because it has been really interesting and I think a productive piece of work I have been able to do since coming to Ireland,” said Mr Aynsley.

IBRC chairman Alan Dukes was paid €150,000 in fees in 2011.

SIMON CARSWELL