Irish Bank Resolution Corporation

Irish Bank Resolution Corporation (IBRC) was an Irish state-owned banking resolution institution that existed from 2011 until its liquidation in 2013. It was created through the court-mandated merger of Anglo Irish Bank and Irish Nationwide Building Society, two institutions whose aggressive property lending and subsequent collapse had become central elements of Ireland's banking crisis. Anglo Irish Bank had been taken into state ownership in January 2009 after suffering severe losses linked to the collapse of Ireland's commercial property market. Irish Nationwide Building Society, another specialist property lender, was effectively nationalised in August 2010 after receiving substantial state support. The government ultimately reported that the rescue of Irish Nationwide had required approximately €5.4 billion in public funding. Both institutions had attracted widespread criticism for their lending practices, governance failures and the scale of their reliance on state assistance. The creation of IBRC was part of the Fine Gael–Labour government's effort to remove the two failed institutions from the ordinary Irish banking system and consolidate their remaining assets and liabilities under a single resolution structure. Acting under the Credit Institutions (Stabilization) Act 2010, Minister for Finance Michael Noonan applied to the High Court for the immediate transfer of Irish Nationwide's assets and liabilities to Anglo Irish Bank. The resulting institution was given the name Irish Bank Resolution Corporation. Noonan said the new name was intended to distance the entity from the damaging international reputation associated with the two predecessor institutions and their former managements. IBRC was not established as a conventional commercial bank seeking long-term growth, retail customers or new lending markets. Its principal role was to manage, restructure and ultimately dispose of the assets and obligations inherited from Anglo Irish Bank and Irish Nationwide. Its activities therefore included loan administration, asset sales, debt management and the resolution of legacy exposures. The corporation remained closely connected to the Irish state's response to the financial crisis and to the restructuring of emergency support previously provided to the failed banks. In February 2013, the Irish government moved abruptly to liquidate IBRC. On 6 February, its board was removed and Kieran Wallace and Eamonn Richardson of KPMG were appointed as special liquidators. Emergency legislation was introduced during the night of 6–7 February to place the corporation into liquidation and replace promissory notes associated with the earlier bank rescue arrangements with long-term government bonds having an average maturity of 27 years. The speed and secrecy of the operation were attributed to concerns that plans had been leaked to the press and that delay could undermine the transaction. The liquidation provoked immediate political criticism. Opposition and independent members of the Dáil objected to the limited time available to examine the legislation, the breadth of ministerial powers in the bill and the effect on IBRC employees, many of whom learned of their dismissal through media reports. The episode became a prominent example of the extraordinary legal and political measures adopted during Ireland's banking crisis. In 2015, the Irish government proposed an Oireachtas motion to establish a commission of investigation into IBRC's operation. On 10 June 2015, Mr Justice Daniel O'Keeffe was announced as the chair of that commission. IBRC therefore occupies a distinctive place in Irish financial history: it was both the institutional successor to two failed lenders and a temporary state vehicle designed for their final resolution, rather than a continuing banking brand.

Irish Bank Resolution Corporation emerged from Ireland's response to the banking crisis that followed the collapse of the country's property market. Its two predecessor institutions, Anglo Irish Bank and Irish Nationwide Building Society, were heavily exposed to property lending and became symbols of the weaknesses in Irish banking governance and risk management. Anglo Irish Bank entered state ownership in January 2009 after the scale of its losses made private recapitalisation unsustainable. Irish Nationwide Building Society was effectively nationalised in August 2010 after requiring approximately €5.4 billion in government support. Both institutions had been criticised for risky lending, concentrated exposure to real estate and management practices that contributed to the severity of the crisis. In 2011, the Irish government sought to consolidate the failed institutions and remove them from the ordinary banking system. Finance Minister Michael Noonan used powers under the Credit Institutions (Stabilization) Act 2010 to apply to the High Court for the immediate transfer of Irish Nationwide's assets and liabilities to Anglo Irish Bank. The merged entity was renamed Irish Bank Resolution Corporation. The name was deliberately intended to establish distance from the reputational damage attached to Anglo Irish Bank and Irish Nationwide and to signal that the new organisation's purpose was resolution rather than ordinary banking. IBRC operated as a state-owned vehicle for managing inherited loans, assets and liabilities. It was not primarily a retail bank and did not have a conventional consumer product strategy. Its work consisted of administering legacy exposures, restructuring or collecting loans, selling assets and managing obligations resulting from the rescue of its predecessors. The institution's existence was short-lived. On 6 February 2013, the government stood down the IBRC board and appointed Kieran Wallace and Eamonn Richardson of KPMG as special liquidators. Emergency legislation was debated in the Dáil shortly after midnight on 7 February. The legislation placed IBRC into liquidation and replaced promissory notes linked to the bank rescue with government bonds carrying an average maturity of 27 years. The manner in which the liquidation was conducted generated substantial political controversy. Members of the opposition and independent deputies objected that Parliament had been given too little time to examine the bill, that the proposed legislation granted extensive powers to the finance minister and that employees were informed of the effective termination of their employment through rapidly developing media coverage. The government's decision was also linked to the need to act quickly after reports that the plans had leaked. In 2015, the government proposed a formal commission of investigation into IBRC's operation. On 10 June of that year, Mr Justice Daniel O'Keeffe agreed to serve as chairperson. IBRC's history consequently spans the consolidation of two failed financial institutions, a period of state-directed asset resolution and an emergency liquidation that became closely associated with Ireland's post-crisis financial administration.

• 2015

  Commission of investigation is proposed

  [1]Irish Bank Resolution Corporationen.wikipedia.org

  The government proposed an Oireachtas investigation into IBRC's operation, with Daniel O'Keeffe later agreeing to chair the commission.

• 2013

  IBRC enters liquidation

  [1]Irish Bank Resolution Corporationen.wikipedia.org

  The Irish government replaced the board with special liquidators and enacted emergency legislation to wind up IBRC and restructure the related promissory-note obligations.

• 2011

  Irish Bank Resolution Corporation is formed

  [1]Irish Bank Resolution Corporationen.wikipedia.org

  A High Court-directed transfer and merger combined the inherited assets and liabilities of Irish Nationwide Building Society with Anglo Irish Bank under the IBRC name.

• 2010

  Irish Nationwide Building Society is effectively nationalised

  [1]Irish Bank Resolution Corporationen.wikipedia.org

  Irish Nationwide Building Society was effectively nationalised after receiving approximately €5.4 billion in state support.

• 2009

  Anglo Irish Bank enters state ownership

  [1]Irish Bank Resolution Corporationen.wikipedia.org

  Anglo Irish Bank was taken into Irish state ownership as losses from its property-focused lending became unsustainable.

A state-owned bank-resolution vehicle created to consolidate and wind down two failed Irish financial institutions, rather than a consumer-facing or growth-oriented banking brand.

• Bank-resolution assets · 2011

  Legacy loan portfolios

  IBRC administered loan books inherited from Anglo Irish Bank and Irish Nationwide Building Society. These portfolios were associated particularly with corporate, property and development lending. The corporation's role was to manage, restructure, collect or dispose of these exposures as part of the resolution of the failed institutions, rather than originate new mainstream banking products.

• Financial resolution services · 2011

  Asset and liability resolution

  The corporation's central offering was institutional rather than consumer-facing: it consolidated inherited assets and liabilities and managed their orderly resolution under state direction. Activities included loan administration, restructuring, asset sales and the handling of obligations connected with the Irish banking rescue.

• 2013

  Controversy over emergency liquidation process

  The overnight legislative process used to liquidate IBRC drew strong criticism from opposition and independent politicians. They objected to the limited parliamentary scrutiny, the breadth of powers proposed for the finance minister and the way employees learned of the institution's closure and job losses. The controversy reflected wider concerns about transparency and accountability in the handling of Ireland's banking crisis.

  Source

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• 2013

  Emergency liquidation and replacement of promissory notesOther

  Background

  The government decided that IBRC should be liquidated rapidly after reports that the planned action had leaked, creating concern that delay could affect the transaction.

  Action taken

  The board was removed on 6 February, Kieran Wallace and Eamonn Richardson were appointed special liquidators, and emergency legislation was introduced to liquidate IBRC. Promissory notes were replaced with government bonds with an average maturity of 27 years.

  Aftermath

  IBRC ceased operating as a continuing banking institution, while the liquidation process and the government's handling of the former banks remained subjects of political and public scrutiny.

  Average maturity of replacement government bonds. Promissory notes → 27 years (2013)

  Source

• 2011

  Consolidation of Anglo Irish Bank and Irish Nationwide Building SocietyM&A

  Background

  The Irish government sought to remove two failed, state-supported lenders from the ordinary banking system and place their remaining assets and liabilities under one resolution structure.

  Action taken

  Following a High Court application by Finance Minister Michael Noonan, Irish Nationwide's assets and liabilities were transferred to Anglo Irish Bank, and the combined institution was renamed Irish Bank Resolution Corporation.

  Aftermath

  IBRC became the state vehicle for managing and winding down the legacy exposures of both predecessor institutions.

  Source

1. 1Irish Bank Resolution Corporationen.wikipedia.org