Who’s getting Anglo’s €22 billion?
Read more about: Economy, Scandal 
A little Saturday puzzler. One likes to believe that the annual report of a financial organisation provides a somewhat comprehensive description of its activities and accounts. With that in mind, consider the following: Where in the 2009 annual report of the Central Bank of Ireland is there a discussion of its approximately €10 billion loan to Anglo-Irish Bank, a loan which has been subject to the same assurance (“backed by quality assets”) as the guarantee was?
Answer: The annual report never directly discusses the loan. Instead, it is mentioned as “special liquidity facilities outside the Eurosystem” and the counterpart is never named (see accounts Notes 1 and 20 in particular). And the total amount of such facilities in 2009 was €11,510,060,000. Put another way, it’s about 4 times the €3 billion in budget cuts that the Minister says we should all really be focusing on. Some of the How and Why of the Anglo bottomless pit revolves around where this loan came from and who else got paid by Anglo with this borrowed money. But the Central Bank’s report has far more disclosure about the finances of its staff pension plan than about the Anglo loan. One more thing for Bernard Allen’s committee to look at.
[Note: A previous fun puzzle based on our banking crisis]
Before the water gets so muddied that no one can see in front of their nose isn’t it time we got answers to a very simple question:
I presume the €22,000,000,000 to Anglo replaces money which seems to have gone missing, disappeared into a black hole. So why is the government who seems to be so flathúil with tax-payers money not following the money trail, where it went and who got it, even out of curiosity.
They could even pick on an example,a high profile transaction e.g. the ballsbridge site?
I have heard hours of discussion on RTE (our national broadcaster to whom I pay €150+ a year) about bank bailouts etc and looking back on it RTE has been doing no more than talking in crcles pretending it is interested in the subject.
P,
Anglo’s 2009 annual report notes:
“Market funding, including borrowings from central banks,
accounts for 64% of total funding, up from 42% at
30 September 2008.”
Later, it states:
“The Bank continues to receive funding from central banks and
monetary authorities under open market operations and other
secured liquidity facilities. Total borrowings from central banks
as at 31 December 2009 of €23.7 billion includes a special
short term liquidity facility arranged through the Central Bank
of Ireland in the early part of 2009. This facility stood at
€11.5 billion at 31 December 2009. The interest rate on the
facility is set by the Central Bank and advised at each rollover,
and is currently linked to the European Central Bank marginal
lending facility rate.”
And finally from the attached notes:
“Sale and repurchase agreements with central banks include €12.2bn (30 September 2008: €7.6bn) borrowed under open market operations from central banks and €11.5bn (30 September 2008: €nil) borrowed under a Master Loan Repurchase Agreement (‘MLRA’) with the Central Bank and Financial Services Authority of Ireland. The interest rate on this facility is set by the Central Bank and advised at each rollover, and is currently linked to the European Central Bank marginal lending facility rate. Collateral assigned under these agreements is derived from the Bank’s customer lending assets.”
In other words, this is ECB liquidity cash loaned to Anglo through the Irish Central Bank to keep Anglo afloat through 2009. It’s listed as a liability. So long as Anglo stay in business, they keep rolling over this debt. Of course if the bank was wound up then, presumably, the loans would have to be repaid to the ECB. Guess who gets to pick up the tab?
Right Veronica but a couple of things to note. Anglo is telling us more about the loan than CBI is. But also, it’s not ECB money. The rate is linked to the ECB rate but that’s Irish money from the start — that’s the one thing that CBI is telling us (“outside the Eurosystem”).
So, and this is linked to Eddie’s question — we have all loaned Anglo the 11 billion to help pay off other creditors, who are now free and clear. And the CBI is protected by the guarantee. So the 11 billion is — us!
So why is the government who seems to be so flathúil with tax-payers money not following the money trail, where it went and who got it, even out of curiosity.
Because Anglo was Fianna Fáils’ own little private piggybank, spreading the wealth around?
P, To add to the mix – Alan Dukes, Chairman of Anglo had a letter in the Indo a couple of days ago:
“YOUR article of July 12 grossly exaggerated Anglo Irish Bank’s capital requirement by double counting.
The bank has forecast its capital requirement in the context of its restructuring plan at €22bn. This figure includes:
The anticipated NAMA discount on around €36bn of loans already transferred or to be transferred to NAMA; and
The anticipated losses yet to be taken on the other half of the loan portfolio that will remain with the bank and that constitutes the collateral for the loan from the Central Bank of Ireland.
Thus, any possible shortfall in the value of the collateral for the loan from the Central Bank is already taken into account in the €22bn capital requirement figure.
Your figure of €33.5bn is therefore entirely without foundation.”
So I guess it all depends on whether or not the ‘anticipated losses’ on the loans that will remain with Anglo are higher than anticipated…oh, dear gawd, I give up!