Banking inquiry: Dukes says better IBRC return was possible

The board and management of Irish Bank Resolution Corporation (IBRC) might have achieved a "better return" for the State had the institution been allowed to wind down as planned rather than being liquidated by the Government in February 2013, former chairman Alan Dukes said yesterday.

"But that has to be speculation," he told the Oireachtas banking inquiry, adding that the special liquidators of IBRC appear to be doing a "particularly good job" in managing the institution's wind up.

The State liquidated IBRC in dramatic fashion two years ago, appointing KPMG as liquidators to the institution.

Earlier, Mike Aynsley, former chief executive of IBRC, told the inquiry that the institution had sold some assets at the direction of the department of finance and the minister at "sub-optimal levels".

He cited the sale of US assets in 2011, which he said the bank would not have undertaken itself and took place under “ministerial instruction”.

"The sale of the US portfolio was done under ministerial instruction, yes," Mr Aynsley told Sinn Féin's Pearse Doherty.

Mr Aynsley said the potential loss to taxpayers as a result of the minister’s direction to sell the assets at that time was probably more than €100 million although he did not have the precise figures available to him.

He said there were “economic value considerations” to the State’s decision to have the US portfolio sold at that time and it was the minister’s prerogative to do this.

“In this case there was a major result that the state was looking for . . . that was to alleviate the very significant problem with the ECB funding levels,” he said.

“It was a State-wide objective that we couldn’t make a decision around.”

Mr Aynsley said the bank would have kept the portfolio for a longer period if “these issues” had not been in play and there would have been a better return to taxpayers.

Mr Dukes said that the scale of the task in winding down Anglo, which later merged with Irish Nationwide to become IBRC, is illustrated by the length of time that it is taking to liquidate IBRC.

“Two and a half years later, the process has not yet concluded,” he said.

“That gives some indication of the difficulties there would have been from a liquidation [of Anglo] in 2008 [instead of the bank guarantee].”

Mr Dukes said the establishment of the National Asset Management Agency was a good decision.

“I don’t think I would have done anything different,” he said.

“You needed some vehicle to take over the distressed loans. I think Nama has worked rather well.”

He said consideration was given in Anglo to transferring all of its loans to Nama when that agency was being established in 2009-2010 and winding down the nationalised bank but this did not gain traction with various players at the time.

Mr Dukes said we might never know what return Nama achieves from the Anglo loans that transferred to the agency.

He said IBRC was on target to be wound down by 2018 – two years ahead of schedule – under the board’s plan.

This was superseded by the State’s decision to liquidate the institution.

When asked if he regretted taking the Anglo job in September 2009, Mr Aynsley, an Australian, said he didn’t engage in regrets.

However, he said the tensions that existed with the Department of Finance during his time in charge of the bank had left a "bad taste" in his mouth.