IBRC loan sale proceeds may exceed €12.9bn

The special liquidators of the Irish Bank Resolution Corporation have told the Government they expect the proceeds from the sale of loan portfolios at the defunct institution to exceed the €12.9 billion in IBRC-related debt issued by the State at the time of its winding up last year.

As a result there will be no additional taxpayer liability relating to the former Anglo Irish Bank and Irish Nationwide above the €34.7 billion that was given to the banks in 2009/10 via share capital and the Anglo promissory note.

It is understood that the Department of Finance will announce these details shortly.

To date, the special liquidators, Kieran Wallace and Eamonn Richardson of KPMG, have announced that they have sold IBRC loans with a face value of €19.8 billion from a total book of €21.7 billion.

But the liquidators have never commented on how much was paid for the loans.

Floating charge
The Irish Times has learned that the liquidators expect to net more than the €12.9 billion in government-guaranteed debt securities paid by Nama last year to acquire the floating charge over IBRC's assets from the Central Bank of Ireland.

This is the equivalent of 65 cent in the euro for every loan sold by the liquidators. This amount is far in excess of what was anticipated at the time of the liquidation last year and reflects the sudden increased interest in Irish commercial property and trading businesses by international investors since the country exited the EU-IMF bailout programme last December.

Any excess in funds above the €12.9 billion would be expected to be made available to the bank’s unsecured creditors.

Nama was also placed on standby by the Government last year to acquire any unsold loans from the IBRC liquidators.

At the time of the liquidation, it was anticipated that the vast majority of the assets would be moved to Nama to be worked out over a period of years. However, the success of the IBRC sales processes means that just €1.9 billion in unsold loans is set to transfer to Nama and this figure might yet reduce further in the coming weeks.

Nama had no control over the bid price or valuation and sales process around the IBRC loans. It is expected to acquire any unsold assets at the price set by the liquidators before the end of the second quarter of this year. It would then manage these assets on a similar basis to its current portfolio.

Earlier this month, KPMG said it would continue to work on selling the unsold remainder of the IBRC portfolios.

IBRC portfolio
The IBRC portfolio comprised commercial loans of about €20 billion and a residential loan book of €1.8 billion. These loans were broken up into various portfolios.

Project Evergreen was a €2.5 billion par value book of corporate loans, with the liquidators selling 84 per cent to investors. Projects Rock and Salt related to €7.3 billion of commercial real estate in the UK and were sold in full.

Project Pebble was €800 million in commercial real estate loans that was also sold in full. The liquidators sold 85 per cent of Project Stone, which amounted to €9.3 billion in par value commercial real estate in Ireland.

They also sold 64 per cent of the €1.8 billion mortgage book, a legacy from Irish Nationwide.

As part of the choreography around IBRC’s sudden liquidation by the Government last year, Nama incorporated National Asset Resolution Ltd, which acquired the floating charge from the Central Bank on March 28th, 2013, for €12.9 billion.

No comment was available yesterday from either the Department of Finance, the special liquidators or Nama.