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A 2008 REPORT by global financial advisory firm Merrill Lynch underestimated the cost of the banking bailout to the Irish taxpayer by €47bn.
The report, which was commissioned by the previous Fianna Fail led government, found that the upper cost of bank recapitalisations would be €16.4bn. The state paid €7.3 million to Merrill Lynch for banking consultancy services during 2008 and 2009.
The Merrill Lynch document was released to Sinn Fein finance spokesman Pearse Doherty as part of a freedom of information request.
Speaking to TheJournal.ie, Doherty said that paid advisors have an obligation to come before any bank inquiry.
These companies were paid handsomely for their services, and if a sovereign state asks them to participate (in an inquiry) it’s important for them to do that.
The Merrill Lynch report outlines many measures which were included in the formation of the National Asset Management Agency. It found that shifting the bad loans from the bank’s balance sheets would have to be paid for almost entirely by the government, as international investors would most likely be put off by the level of risk involved.
The report said:
Creating a Nationalised Bank would enable the Government to cleanse the Irish financial system from low quality loans
Doherty said that there needed to be clarity on how the estimates provided to the government of the time could be so wide of the mark. He said that the finding of the report that Irish Nationwide, which eventually needed €5.4bn in cash injections, would only need €428 million, was particularly shocking.
“How were they able to look at Irish Nationwide and say that they required a small amount of capital?”
He said he was not confident that the government would organise a “meaningful bank inquiry” any time soon, and that doing so while former executives at Anglo Irish Bank are still on trial was impossible.
He said the bank inquiry should not limit itself to what the government and oversight bodies of the day did in the run up to the banking crisis.
I would like to focus not just on what the last government and the regulator did, but also on the accountancy and auditing practices of the time. That’s where the real lesson is to be learned-there’s no guarantee that this won’t happen again in 10 or 20 year’s time.
Updated 15.04
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Can I have my money back now
It’s like’…..burning your furniture – to keep warm!
Why are PwC saying this instead of IBRC and NAMA?
As property prices start to rise nama , ibrc start to dump property
Can someone explain why?
Dumping loans philip, not property. They’re Dumping the loans as they’re non-performing and want to get them off the balance sheet.
If they had the patience, they’d put arrangements in place to allow the properties to return to positive equity and then seek a sale, this recouping more of the tax payers money.
Unfortunately, they’ll sell the loans for a discount and allow the new purchasers to do this and net a tidy profit.
The article outlines that IBRC (IBROKE would probably be a better name) will offload € 15 billion in loans.
Yet the linked article tells us that IBROKE have already offloaded 90% of its loanbook, € 19.8 billion out of € 21.7 billion leaving just € 1.9 billion on hand.
This can only mean, if the previous article is correct, that it is NAMA that is offloading the majority of the loans.
Why the subterfuge?
Why make people think that this is some kind of joint enterprise when it is NAMA that is leading the charge?
Have the shiny suit brigade from the canal something to hide?
Given their obsession with secrecy it would not surprise me if they have, perhaps selling the loans to some preferred customer with an inside track at a serious discount.
The way things go it will all be wrapped up before we know anything, plus ça change.
Who in their right mind would buy this junk?
It might only be worth 30% of face value but if you buy it for 20% it’s a good deal. For the buyer anyway.
@ Irish Revolution
The Banks?
Hedge funds bought it. They will now sell off all the ghost estates etc at a lower price so people that have houses for sale at the min will eventually have to sell for half or take them off the market.
Fab house here in drogheda asking price €325. Hilarious. You could now nearly get a house for that on raglan road or ailsbury road!! So that house is realistically worth less than €150 really.
People and notions ha
What about Bank of Scotland selling on my mortgage & others in their Irish portfolio to a company called Tanager Ltd.
I’m in a tizzy all day because I don’t know what it means for us.
have your say