Ireland

When Anglo Irish Bank announced a long-awaited exchange offer for its junior debt last week, there was shock in the market at the harshness of the terms. There were also howls of protest privately from the debtholders themselves to the advisers of Anglo Irish, the institution bailed out nearly two years ago by Ireland’s government after being hit hard by the country’s property slump, the Financial Times reported. One irate investor described the offer as equivalent to a North Korean election.

Anglo Irish Bank’s former chief executive David Drumm has until Friday next to file a statement of his assets and liabilities in his bankruptcy proceedings in the US, the Commercial Court in Dublin heard yesterday, The Irish Times reported. Mr Justice Peter Kelly adjourned Anglo’s actions against Mr Drumm and his wife as a result of Mr Drumm’s unexpected decision earlier this month to file for voluntary bankruptcy in the US.

Anglo Irish Bank’s offer to swap its subordinated debt for new bonds is “tantamount to a default” because of the penalties inflicted on investors who refuse to take part, according to the Canadian credit ratings agency, DBRS, The Irish Times reported. The bank’s non-senior ratings will be reduced by one notch step to D for “Default” after Anglo completes the exchange, the Toronto-based agency said. The nationalised bank is offering investors 20 cents on the euro in new bonds on dated subordinated debt and 1 cent for every €1,000 face amount for those declining to take part.

Anglo Irish Bank announced Thursday it will make its junior bondholders absorb heavy losses on their euro3.5 billion ($4.9 billion) investments - the first loan defaults in Ireland since the nation's banking crisis began two years ago, the Associated Press reported. The nationalized Dublin lender, the most debt-crippled bank from Ireland's burst property bubble, said the two lowest tiers of bondholders would be offered payouts equivalent to 20 percent and 5 percent of their original investments, respectively.

The Republic faces an interest bill of about €7 billion on its national debt next year, a senior Department of Finance official confirmed yesterday, The Irish Times reported. Speaking to the Dáil’s Committee on Public Accounts yesterday, the department’s secretary general, Kevin Cardiff, agreed under questioning that an estimate of €7.5 billion was “about right” for the interest bill faced by taxpayers on the national debt.

Creditors of Aer Arann are set to receive €2.2 million from the airline’s new investors in settlement for their debts, The Irish Times reported. This is part of a scheme of arrangement that has been put together by Aer Arann’s examiner, Michael McAteer of Grant Thornton. Some creditors – notably the Dublin Airport Authority – are set to receive all of the money they are owed under the terms of the scheme, but others will get back just 2 per cent. It is understood that AIB’s exposure of €5.2 million would be rolled over into the new entity.

Anglo Irish Bank has secured a temporary court injunction restraining the wife of its former chief executive David Drumm from transferring the couple’s former home in Co Dublin from her sole ownership back to the joint ownership of her husband and herself, The Irish Times reported.

Here are some interesting questions from an Irish MEP which boil down to this: How come Allied Irish Banks passed the European bank stress test in July and three months later the Irish authorities stepped in to announce a €3 billion capital injection? Alan Kelly, an opposition Labour MEP, has written to European competition commissioner Joaquín Almunia, who oversees state aid programs, posing three questions, The Wall Street Journal Real Time Brussels blog reported. Was the bank giving a truly accurate assessments of its projected losses?

Financial regulator Matthew Elderfield called for an urgent review of Ireland’s bankruptcy laws as international ratings agency Moody’s reported a growing number of Irish mortgage holders are in arrears, The Irish Times reported. Reform of the bankruptcy regime could allow borrowers to earn a fresh start by discharging their debt over a reasonable period of time, Mr Elderfield said. However, he cautioned against debt forgiveness for the thousands of mortgage holders currently behind with payments on their loans.

Former Anglo Irish Bank chief executive David Drumm has filed for bankruptcy in the United States after the State-owned bank rejected his proposal to settle its legal action in the High Court in Dublin over loans of €8.5 million, The Irish Times reported. Mr Drumm applied for bankruptcy in a Boston court in Massachusetts near his US home at 3pm Irish time yesterday in advance of the bank’s case starting on October 26th.