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IRELAND’S BLANKET GUARANTEE for its banking sector has been officially withdrawn, after four-and-a-half years.
The guarantee – introduced in infamous haste in September 2008, as an effort to save the banking system from collapse – meant Ireland had to foot a €64.1 billion cost for saving individual banks.
The sheer cost of the banking bailout meant Ireland itself was forced into an EU-IMF bailout in November 2010, when the scale of its banking losses leaving investors demanding penal interest rates in order to lend to the Irish government.
Six institutions were covered by the guarantee – AIB, Bank of Ireland, EBS Building Society, Irish Life & Permanent, Anglo Irish Bank and Irish Nationwide.
Ireland’s investment into those institutions left it with a 15 per cent stake in Bank of Ireland, a 99.8 per cent ownership of AIB, and in total ownership of EBS, IL&P, Anglo and Irish Nationwide.
EBS has since been restructured into a subsidiary of AIB, while Irish Life & Permanent has been split into two with the Irish Life arm sold off to the owners of Canada Life, while Permanent TSB remains a wholly-owned government bank.
Anglo and Irish Nationwide were merged into a new body, the Irish Bank Resolution Corporation, which is currently being liquidated.
The withdrawal of the guarantee – which lapsed at midnight – means the Irish government will no longer offer a state guarantee for any new bonds issued by the banks.
It also means that if the banks require further recapitalisation, after the next round of stress tests, the government will not be considered legally responsible for offering any further investment.
The withdrawal also means that the State will revert to guaranteeing deposits up to €100,000 in each bank – a guarantee made under a separate, permanent scheme – but will not insure balances over that amount.
However, it will continue to guarantee bonds issued while the guarantee was in place – which are collectively worth tens of billions of euro.
Two of the covered banks, Bank of Ireland and Permanent TSB, chose to issue new bonds this week before the guarantee ended.
Bank of Ireland borrowed €5 billion, while Permanent TSB raised €3.065 billion, with both bonds due for repayment in March 2015.
Each of the two bonds was issued on Wednesday, just a day before the guarantee was withdrawn.
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Gavan,
You are using the term ‘bailout’ a bit loosely. Ireland did indeed bailout its 6 bust banks in 2008 but the EU-IMF (Troika) did not bail Ireland out in 2010. What the Troika did was loan us €67 billion of which €64.1 billion has been used directly to cover private illegitimate banking debt. ( This does not include the €32 billion we have pumped into NAMA to indirectly prop up the banks also.)
Ireland will pay that €67 billion back to the Troika with interest, and in addition they get to have the banking system of the Eurozone stabilised at the expense of the Irish people. Whatever this is, it’s not a bailout. Ireland is digging its own economic grave and the Troika are billing us for the shovel.
Dunno who’s red thumbing. You couldn’t have simplified it any better.
Yes Cobbler. The spin we were given boggles the mind, and how the hell do the people of Meath vote in another FIne Gael TD (after their lies) and how the hell are the party (FF) that bankrupted us coming in second. It’s like being in the twilight zone. Scary to say the least.
Thanks for that !
Muppetts who have no legitimate contribution to make red thumb a comment to annoy, wind up and disagree. Yet havent the balls to say it out loud. As I said, muppetts.
He could have simplified it a good deal more accurately. No bailout money went into the banks…all the money that went into the banks (which doesn’t yet amount to €64b, because most of it is in the form of IOUs) came from the NPRF or Exchequer cash. The bailout loans have subsidised the deficit, not the banks, but the government prefers not to mention that, for obvious reasons. Unfortunately the left-wing parties don’t like to mention it either, or the unions, for obvious but slightly different reasons.
As a result, we have a public debate which is founded on everybody ignoring the facts in favour of shouting about their preferred concerns.
So if or when these banks earn big profits again the irish taxpayer will benefit?the banks shares will be sold back to the banks for a pittance that we bailed them out for,irish taxpayer screwed once again
Plus they can write off their massive losses against tax for years to come. At a minimum people earning a living at these institutions should have paid a tariff .. Two weak governments left us in the hook … But at least reform is in the way
The Banks cannot, in law, buy back those shares without the consent of the shareholders.
And the shareholder happens to be MoF
Law. Ben are you joking me. There’s no law, law come on. If there was law people wouldn’t be living from hand to mouth because of big business and dodgy banks. Law, there’s no law. Government, bankers, bankrupt business men are laughing at us because there no law that stop these people. If you want law, don’t pay your TV licence, then you’ll get law.
HUGHIE could not have said it any better ,this is an illusion that we live in a democracy now after the meath bye election the goverment will feel; they can do what they want and they will not be held accountable by the elecorate,now they are staring at your savings .
Ho hum, who cares anymore, as long as deep pockets in dail are safe!
Get you money out folks they got away with in cypress we are next!!
No. They won’t. Because we were wise enough not to go with the Cyprus-SF strategy of telling the EU to f@ck off.
SF?
Is your argument skills so limited you have to fill out comments with SF?
But i guess the only reason you’re mentioning them is over the lack of alternative policies we’ve had from all sets of government leaders since we were sold up the swanny to protect foreign banks, the EU wrote the rules, FF dotted the i’s and FG are just obeying them.
By saying “we” you’re suggesting we had a choice in all this, time to wake up.
I See the Journal red thumb police are out again.
Correct Kevin, Correct.
Dipping into peoples pension was theft so instead of saying what happened in Cyprus won’t happen here remember it already has or has your selective amnesia button stuck?
If we had have held out like Cyprus did it would have been totally different.
We had a much stronger hand. Ireland are much bigger and much more of a risk to the European project. Most of our bondholders are German. German banks would have been terrified at the thought of Ireland going belly up. If we left Europe our money would be devalued, I’m not saying this is good (it would not be good! For example importing, say petrol, would drive up the country’s entire running costs causing all sorts of problems). With the Irish situation ‘European’ investors (not Russian) would have been burnt (so too would Irish depositors).
They can let Cyprus fail. They couldn’t let us fail. We should have played to this… We didn’t!
I’m not saying we didn’t need the bailout. What I’m saying is that we could have played a much tougher game. Our banking sector would have been on the ropes but so too would the entire European Project. We are too big to fail because Spain, Italy etc are even bigger, too much of a risk to let Ireland go. Knowing this our ‘leaders’ should have negotiated better. They didn’t however, and they lost a great chance to secure a much better deal.
We really could have bluffed, but we didn’t. Instead we have ended up with a much worse deal.
Declan- unlike us, Cyprus had another possible source of finance in Russia and a big gas find off their coast. It was also much cheaper to bail out Cyprus than Ireland. Pocket change, in fact. They had much betters stage. These things are never viewed in isolation. Ireland’s deal was negotiated at a time when the EU didn’t know who would be coming next. A sweeter deal for Ireland would have meant a sweeter deal for Portugal, Spain, Italy. They were always going to set a stern precedent. We’re a nation of 4.5m people. Our influence depends on alliances not biting the hand that feeds us.
Dermot- I mention SF because they espouse anti-EU policies. Populist policies that would lead to the ruination of our country. Also nice to point out the lunatics in our midst.
What do you expect when we have teachers and solicitors running the country, they don’t have a clue! All they are interested in is feathering their own nests!
Ireland has lots of oil and gas, the problem is they gave it away to the likes of Shell
Kevin, I don’t believe that when we negotiated our deal those in Europe did not have the foresight to see Spain, Italy etc. were also in danger.
Of course they knew very well that the contagious affect of Ireland going under would potentially be the end of the European project (can you imagine what would happen the triple A status of those countries who were our creditors?)
The two Brians, on the other hand, our ‘leaders’ of the time (and chief negotiators) were calling into a shocked David Mc Williams’ private house (in the middle of the night) to get advice.
This was the calibre of our negotiating team! This is literally crazy!
The banks here held out so long that when they finally hit the government they left them so punch drunk they could not think properly. We then panicked and literally took the first deal possible to avoid a run on the banks.
Europe knew this.
They knew we were under pressure. The two Brians could not think properly. They were not qualified in any event to think about this
I’m not saying that we ‘should have known’, I’m saying we ‘should have known better’. While hindsight is a great thing so to is foresight. Our guys were clueless, they did not have any foresight.
I’m simple terms, once a lender extends too much it is they who worry about default, more than the borrower. Forget about about Spain etc, we couldn’t even capitalise on this simple notion.
At the start, that was our best chance to secure a good deal.
It’s too late now!
Dick
Good riddance to Lenihan. He thought more about robbing the Irish people to help the elite than saving the people from decades of austerity.
Just a little respect for the deceased would do no harm. I didn’t agree with his politics or policies either but he served his country until the very end.
The dumbest remark to date. Brian Lenihan was given a stark choice; let the banks go bust and the Stae with them, or give the guarantee. Those were the only options, There was no troika or any other group available to help. And don’t forget there was no deposit guarantee scheme of any description in place. If the banks had gone, all deposits, including current accounts, would have gone.
What would you have done, given that you had 12 hours notice?
Kevin Shaw. I totally agree. U could see his health was failing and he still was determined to do his job. Thats a true selfless patriot in my mind.
And what job was that? It wasn’t helping the common person that’s for sure
12 hours notice? Cyprus went into lockdown mode – perhaps by having no choice or by learning from our mistakes. Close banks for 2 days – would have bought the weekend and more informed decision made. The legislation which followed had no kick backs against the banks at all – it should have included offences for providing false information, loss of pension fund and massive pay cuts across the board (these institutions paid well). Auditors that signed off on accounts year after year , should have been implications there also. It was like a drunken encounter on a one night stand – mammy and daddy have gone but the needy child is sill here.
Lenihan as person I think came across well over years – he had the balls to stand up against the crap going on and perhaps it was reason he got sick. Whilst biffo was … well where was he? I can guess. But he had no training in his discipline – his senior CS were promoted even after a 3 billion double post error. Most management teams are still in place in CS & banks (boards are gone but because of contracts – another error). Lenihan though is a product of the inbred irish politic system which was seen in Meath yesterday.
Ben- there were reasons we got to that seminal night, too. And his party brought us there. That shouldn’t be forgotten. But that doesn’t make him an evil man.
Terry- ok. You’re one of the special people. Fair enough.
Kevin, absolutely they did. And the prime culprits were Cowen and Aherne. The 2007 budget was little sort of criminal negligence.
Do you have more or less money in your pocket because of him? That is all.
Terry, that’s the kind of attitude that got FF elected despite all the scams and scandals their leadership were involved in. We all had more money from them until the chickens came home to roost.
@Kevin – FF brought to the point – but FG had councillors all over the country on the bandwagon rezoning anything they could – guilt by association in my books. FG councillors sat on county & town councils that were essentially providing banking facilities to developers which now is being socialised as part of the lpt – fingal being the worse by a country mile.
A question for you – What is the main difference between FF & FG? The average man on the street I don’t believe see one; why are you FG rather than FF (family?). Both parties were essentially born out of civil war – but with Ahern accepting Collins view with the GFA – why do both exist now? Not trolling – just an average joe who is asking more questions of our public reps who I believe deliver poor value for money.
12 hours my …..
@deirdre – thats an interesting point but I see that as a weakness because he couldn’t be giving 100% with such issues hanging over him – thats human nature – no one could. Was that because he didn’t trust any of his colleagues? The fact HE got elected whilst his PARTY got wiped out in Dublin says alot. I don’t belief in the don’t speak ill of the dead mantra – but he did what he believed was right at the time – just he didn’t cover all the bases
.. sorry put this the wrong place
@ Terry Morgan : Fair play for having the balls to say it.Brian Lenihan was a disgrace and he shouldn’t be exempt from criticism just because he’s dead.
@ Kevin Shaw : “but he served his country until the very end.” So you think what Fianna Fail were doing during all that time was “serving the country”??? Very easy to just blame Cowen and Ahern,when there were far more in that party with questionable motivates including Lenihan himself.
FG are quite content to let the late Brian Lenihan shoulder the blame, it gives them their sole base of argument in the Dail yet fail to denounce the bullying actions of the EU/ECB.
respect for the deceased my arse!! he’s spared the pain of living through his mistakes!!
Ger- I’m FG because I’m centre right in orientation. My mother was FF, my father FG. When I was growing up Charlie Haughey was Taoiseach and I decided FF was institutionally corrupt if they could let him lead them. I was subsequently proven right by Ray Burke, P Flynn, BC Flynn, Liam Lawlor, Bertie Ahern, Ivor Callely etc etc. I also fundamentally believe FF are more about winning elections than running the country. Sadly their giveaway budgets and our economic fate proved this. So for me, FG are much more honest…they’ve had their rotten eggs but nothing compared to FF or SF and have more integrity when it comes to making necessary unpopular choices ( that’s why FF hold power so much more than them). When this Government set out I decided that all I expected was for them to stabilise the country, get the Troika out and leave the country better than they found it in 2016. So far, they’re doing well. You did ask.
@Kevin … I did ask and I thank you for your answer. I would share most of your views as well also but would see FG in a little more sinister light. My local TD and his antics in trying to co-opt the wife to his council seat, then employing her (and no doubt she wlil emerge as a candidate next year) an his stance on funding local government when he taken alot of cash from it as it was going down the tubes due to mismanagement on his watch and not sure how long I can take his blame FF for all evils on twitter! Perhaps the troika has been a good thing and should hang around until the incurred on their watch is repaid as we won’t really get our independence back till we are debt free. Good luck.
Ben, you honestly believe that? Come on . He was a dirty lier. Even if he was alive, I still would say the same and I do repect the dead but deceased or not, changes nothing about what the last regime knowingly did to us and our children. Dont be naive, this was a well planned heist.
Each week he came back and said tge bailout was more and more-drip feeding it to us. A child could even see that the banks were lying and he went along with it.
Gerbreen. Thats a fair point. I think this whole economic debacle is still unfolding so we still dont know how Ireland are going to come out of it. I think maybe in 5 or 10 years time it will be easier cast a critical eye over the events of the bank bailout. Its my feeling that Brian Lenihan may have done the right thing. Tho my purse wouldnt agree at the moment.
@Jason, your either tripping or o ding on conspiracy theory movies. When you rejoin the real world let us know
@ Benn Gunn everything Jason Bourne just said is true, you may not want to admit it to yourself but the banking community win during booms and in crashes get bailed out by the people they robbed and scammed all the way through the boom, the only difference between boom and bust is they rob you on a monumental scale during bailouts, the evidence is there to suggest that those who have the money hedged their bets so they win no matter how the cookie crumbles.
this is nothing more than a man made crisis and the pople pay.
Our politicians are good for one thing…. Rezoning a bit agricultural to residential that’s about it really…. Other issues get far too complex after that
Don’t forget about the pot holes. I heard they are top men at getting pot holes filled in..
People in Ireland are not broke the state is. This country is awash with cash its mainly self pitying septic tiger pups crying the poor mouth feeling that are hard done by.
I don’t like agreeing with you
Imagine what that money could have done if it was invested in better infrastructure, not closing down garda stations, helping the homeless and the sick etc.
Golden circle have been protected and nobody in prison so the political establishment continue on their merry way of golden pension lifestyle.yesterday’s Meath by election show you can fool the people all the time.
Well said mate, I despair for my country
should have let them burn, no point crying now, we are where are today because of it.
Yeah because as bad as Cyprus was “just” for two weeks, leaving the banks burn in Ireland would have been far far far worse,
It wasn’t easy, it was costly, but leaving banks fail would have cost us far far more jobs in the long term, smaller businesses would have went under and alot of people both well off and poor would have lost money.
it’s sad that even today the irish people still refuse to fight back even though every man woman and child now knows they’ve been robbed by the super rich and the politicians they own!!
Dark chapter in this country’s financial history closes…it will stand as an image for a lot of the self serving interests of the political low life that have and continue to ruin this country. Good riddence indeed!
Free to raid them now.
Bailout scrapped?? Yeah right, and I’m the Pope
Colin
As you say you not the Pope, and the bailout has not been scrapped.
However the bailout will be scrapped when the Pope is a practising lesbian.
What most people don’t understand is that expecting the Bankers of the EU/IMF to sort out the Irish Bankers problems is like expecting a practising lesbian to be elected Pope.
Ah welcome Pope Frawley. We are blessed with your presence…
Mistake in the article there- was the guarantee not introduced in September 2008??
Credit Institutions (Financial Support) Act 2008 http://www.irishstatutebook.ie/pdf/2008/en.act.2008.0018.pdf
Once a Thief – Always a Thief: A thief steals either covertly or overtly = Inflation or Bail-In
The banking road to perdition:
a) Banks stood good for their own losses
b) Banks get bail-out by way of the taxpayer
c) Banks get bail-in by way of their account holders, while still getting bail-outs
It’s now obvious for all to see, as plain as the nose on your face that the global banking/financial/political system is nothing more than an international criminal crime cartel populated with thieves.
This crime cartel operates with the full knowledge/cooperation of governments, at the behest of the corporate oligarchs who own them.
The total lack of control occurring in Europe’s financial system resemble a heroin addict, they will lie, steal and do anything to get that next fix. Now they are at that state of starting to steal from family members now and will eventually be turfed out on the street, their absolute worthlessness to humanity fully known by all.
@deirdre – thats an interesting point but I see that as a weakness because he couldn’t be giving 100% with such issues hanging over him – thats human nature – no one could. Was that because he didn’t trust any of his colleagues? The fact HE got elected whilst his PARTY got wiped out in Dublin says alot. I don’t belief in the don’t speak ill of the dead mantra – but he did what he believed was right at the time – just he didn’t cover all the bases.
cheapest bailout in europe oh those words still haunt this country when lenihan uttered them
Maybe we should all read this and then decide:
http://www.irishtimes.com/news/world/europe/conned-a-german-view-of-ireland-1.1454115
At least we know now what the Germans think of us
Why where these banks allowed issue bonds day’s before the guarantee is due to stop? Surly the central bank has a say or some sort of legal route to stop this? Nothing learned by the looks of it, if anything goes wrong we will have to pay these guaranted bonds I wish there was a way the owners us can stop such practice.
I’m shocked by some of the comments on this and other stories, there are some people with extremists views..
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