Category: Finance

Anglo losses

Take a look at the last paragraph from the front page story of the Irish Independent today:

One of the biggest problems is that Anglo’s staff are mainly skilled in property lending, but the EU does not want the bank to build up a major exposure to that sector again.

Well clearly the staff were not “skilled in property lending”?

But read the headline and note the date: July 12, 2010. “Economic crisis: Final bill for Anglo may be €33.5bn”

This figure is likely far more. As Peter Matthews said on June 16:(start at 9.00)

That €22bn loss is actually €32bn, and perhaps if we add the Central Bank loan we might get closer to €43.5bn. But I ain’t no expert.

That Fás 'slush fund'

Fás is back on the news pages today, this time it’s about a “slush fund” which the Department of Enterprise Trade and Innovation is accused of ‘sponsoring’ between 2002 and 2008. The fund, also known as the Competency Development Programme, was a sort of grant scheme for organisations who were to use the money to up-skill staff. There are serious questions being raised about how it was administered and monitored.

The latest company which benefited from the CDP to come under the microscope is Foras Training. Today’s Irish Independent…

A COMPUTER-TRAINING company that falsified the number of people on its courses was paid almost €1.3m by the state agency FAS.

The midlands-based company — which was named in the Dail yesterday as Foras Training — claimed for people whom it had not trained.

It also had only one properly registered trainer out of 25 for courses that it delivered on behalf of FAS. The company printed its own training certificates, instead of registering them with a certifying body.

Furthermore, as Roisin Shortall noted at the Public Accounts Committee yesterday, bodies associated with social partnership benefited enormously from the CDP. Many of these bodies would have had representatives on the board of Fás. The Irish Times covers the committee meeting here.

A number of months ago myself and Gav began looking as Fás from a number of different angles. During that process we obtained documents relating to the CDP. These gave us list of companies and the figure for funding they received each year. Interestingly a large number of those in the CDP were local authorities. Why a semi-state body would be funding a state body to train civil servants, I struggle to understand.

I’ve put together a spreadsheet with the names of organisations who received funding, see below. The figures are not included as of yet because the spreadsheet was auto-extrapolated from PDFs of scanned pages; the software used to do this seems to have been confused by some fonts involved so the numbers would not be reliable if I were to publish them now. I’ll manually insert these into the spreadsheet in the coming week and post again then. I will say that the first thing I noticed was that the annual totals increased massively from just €500,000 in 2003 to more than €50 million a few years later, then fell by almost 50% afterwards. Strange, during a period of pretty much full employment.

Companies; Fás Competency Development Programme 2003-2008

Whatever about the annual totals or reasoning behind the fluctuations, that just half of the organisations in receipt of finding were being monitored for how they spent the money or who was being trained, according to the C&AG, is scary. That’s a helluva lotta money slushing about…

The main beneficiaries, at first look at the spreadsheets, were IBEC, ICTU, Mandate and ISME. It appears the Unions and ‘representative’ bodies between them took a large slice of the whole pie. There are also few companies with intriguing directors listed. I may get around to these in the next blog post, but I’ll have to pick a few legal brains first

Anglo emails

I received a bunch of emails today from the Department of Finance in relation to communications with Anglo Irish Bank between September 2008 and February 2009. I will scan them all shortly and upload. One in particular though caught my eye. It’s an email exchange between Marie Mulvihill at the DoF and John Paul Coleman at Anglo Irish Bank. It’s dated February 2, 2009, just two weeks after nationalisation, subject line: “Query over Tier 2 capital”.

John Paul

We have received a query regarding the tier 2 capital securities on Anglo Irish Bank’s balance sheet. I’ve had a quick look at the preliminary results as at 30th September 2008 but can’t locate a break down.

I would be grateful if you could outline what makes up the Tier 2 capital and whether it is covered by the Bank Guarantee Scheme.

Many Thanks

Marie

About an hour later, John Paul emailed back, stating:

Marie,

With Tier 2 capital the Bank has two forms of securities issued these are Lower Tier II (LT2) and Upper Tier II.

LT2 the Bank has issued all have a final maturity date and therefore fall into the dated subordinated category’ which is covered by the Bank guarantee scheme. The coupons on LT2 cannot be deferred and most be paid at each coupon date

The Bank has 5 LT2 deals outstanding these are
€750 million Floating Rate Subordinated Notes 2014
US$.165 million Subordinated Notes Series A 2015
US$ 35 million Subordinated Notes Series B 2017
€500 million Floating Rate Subordinated Notes 2016
€750 million Floating Rate Subordinated Notes 2017

In total the Bank has €2,112 million outstanding at 30t h September 2008 of LT2 Upper Tier II that the Bank has issued is perpetual bonds i.e. they do not have a final maturity date.

Unlike LT2 the coupons on Upper Tier II can be deferred but are cumulative i.e. if you miss one coupon payment at the next coupon payment date you most pay the two coupons. Upper Tier II is not covered under the Bank Guarantee Scheme as it is perpetual

The Bank has one Upper Tier 2 GBP300miilion with a value of €385milIion at the 30th September 2008.

If you need any additional information please let me know.

Regards
John-Paul

The question I am asking myself is why, two weeks after nationalisation, the Department of Finance was only then asking about Tier 2 Capital? Interestingly, Carl O’Brien at the Irish Times sought the briefing papers used by DoF officials at a recent Oireachtas committee. The DoF is keen to defend itself it would appear.

Original document here:

DOF/Anglo email