* ECB will consider Ireland's plan later on Thursday
* Government eager for a deal after 18-month negotiation
By Carmel Crimmins and Stephen Mangan
DUBLIN, Feb 7 Ireland's government rushed
through emergency legislation early on Thursday to liquidate the
failed Anglo Irish Bank as it tries to secure a deal with the
European Central Bank to ease the country's debt burden.
Prime Minister Enda Kenny has staked his administration's
reputation on cutting the cost of bailing out Anglo Irish, now
known as Irish Bank Resolution Corp, or IBRC, and the ECB's
governing council in Frankfurt is considering a fresh proposal
after a previous plan was rejected last month.
"This closes a sad and tragic chapter in our economic
history," Kenny told a special session of the lower house that
stretched until 3 a.m.
Technical negotiations between the ECB and Irish officials
have dragged on for 18 months, with Frankfurt conscious that any
proposal offered to Dublin could possibly set a precedent for
other countries, such as Spain, dealing with large bank debts.
But European leaders also need a success story to emerge
from the region's crisis, and a rescheduling of the so-called
promissory notes or IOUs given to IBRC could help Ireland exit
its EU-IMF bailout on schedule this year.
Under Dublin's new plan, first reported by Reuters on
Wednesday, IBRC's liquidation was necessary so that the Irish
government no longer had to make 3.1 billion euros of annual
payments on the promissory notes stretching out until 2023. The
next payment was due next month.
The government had originally hoped to unveil the
liquidation of the former Anglo Irish in conjunction with a deal
from the ECB, but the Reuters report meant Dublin had to
immediately legislate for its demise.
Finance Minister Michael Noonan told parliament the
government could not deny the report and therefore risked
destabilising the bank's position.
"I would have preferred to be introducing this bill in
tandem with a finalised agreement with the European Central
Bank," Noonan said. "But we had to move."
Noonan said the ECB would consider Ireland's proposal at its
monthly meeting later on Thursday.
Opposition lawmakers, angered at the short time they had to
digest the highly technical 58-page bill, complained that they
did not yet know what, if anything, would be agreed with
"We cannot vote for this if we don't know the other part of
the package," said opposition lawmaker Shane Ross.
But Kenny's large majority prevailed and the lower chamber
voted in favour of the bill by 113-36.
People on social media website Twitter dubbed the session
#promnight, a play on words on Anglo's infamous promissory
notes, and one user said the late night meant lawmakers finally
had a legitimate reason to be asleep in parliament.
President Michael D. Higgins will sign the bill into law
later on Thursday. He cut short a state trip to Rome to ensure
he could consider it.
Anglo Irish and its casino-style lending were at the heart
of Ireland's financial crisis. The bank's near collapse in 2008
pressured the government into guaranteeing the entire financial
sector, sucking it into a downward spiral and in late 2010, a
67.5 billion euros EU-IMF bailout.
Three of the bank's former executives, including its former
CEO, will go on trial next year on fraud charges.
Under Dublin's plan, the 28 billion euros in promissory
notes will be replaced with long-term government bonds, meaning
that Ireland can make more gradual repayments, a source familiar
with the discussions told Reuters.
Anglo Irish's assets, of between 12 billion and 14 billion
euros, will be transferred to the state-run bad bank, the
National Asset Management Agency, or NAMA, which will pay for
them by issuing its own state-backed bonds, a source familiar
with the situation said.
Accountancy firm KPMG was appointed as liquidator.
"The board has no further function, the functions of the
board are being taken over by KPMG," Alan Dukes, a former
finance minister and the current chairman of IBRC, told Reuters.
Dukes and the IBRC board were only informed about the
liquidation plan on Wednesday, according to sources familiar
with the matter, while remaining staff members were told via
IBRC, which was due to be gradually wound down by 2020,
employs about 775 people. Their contracts were terminated, as is
usual in a liquidation, but Noonan said he expected KPMG would
rehire most of them to help wind down the bank.
The ECB rejected Dublin's preferred solution of rescheduling
part of its bank bailout bill when its board discussed the plan
for the first time last month, EU sources familiar with the
If the ECB signs off for the plan, most of IBRC's balance
sheet will pass to Ireland's central bank when the scandal-hit
bank is liquidated, a source told Reuters.
Under its original plan, Ireland wanted the Irish central
bank to hold a long-term bond for a minimum of 15 years. The
ECB's Governing Council warned that such a long holding period
would effectively be "monetary financing", which is prohibited
by EU treaty.
The 15-year clause is now being dropped, a second source
Opposition lawmakers told Kenny he had failed to cancel the
"You are winding up the bank but you are not winding up the
debt and that's where you critically failed," Pearse Doherty,
finance spokesman for the Sinn Fein party, told parliament.