Wednesday, 25 January 2012

Questions (59, 60, 61)

Stephen S. Donnelly

Question:

54 Deputy Stephen S. Donnelly asked the Minister for Finance if he and his officials use Clearstream and Euroclear to identify the current owners of unguaranteed, unsecured senior bonds, as he proposed to the previous Government in the Dáil towards 15 December 2010; if not, the reason therefore; and if he will make a statement on the matter. [4207/12]

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Written answers (Question to Minister for Finance)

Throughout the entire process of issuing senior bonds the bond issuer itself remains unaware of the individual bondholders' details. The Central Bank has advised me that the process of issuing new senior bonds is normally through underwriting, where one or more securities firms or banks form a syndicate buying the entire bond issue from the issuer and then re-selling to investors. Primary issuance is arranged by these syndicates who contact potential investors and advise the bond issuer in terms of timing, tenor and pricing of the bond issue. The bond issuer will likely have little knowledge of the eventual owners of the bonds; also these owners may over time sell the bonds to other investors.

Bonds are usually issued in bearer form which means that the purchasers of the bonds are unknown, with the bonds usually held by a securities depository company (e.g. Euroclear and Clearstream). When interest and principal payments are made the bond issuer transfers the required funds to the securities depository company who in turn pay the funds through to the bondholders. Securities depository companies, such as Clearstream and Euroclear, usually manage, safekeep and administer the securities that it holds on behalf of the beneficial owners of the bonds and the identity of these owners is not disclosed in the public domain or to the issuer.

The Department has made detailed enquiries through normal channels to establish the identities of the current owners of the senior bonds. Though it may be possible to establish the geographic location by country of the financial institutions and hedge funds which hold the bonds, it has not been possible to ascertain with any certainty the identities of the relevant bondholders.

Stephen S. Donnelly

Question:

55 Deputy Stephen S. Donnelly asked the Minister for Finance if and the way he and his officials identified the junior banking bondholders, for whom haircuts on their bonds were imposed by him; and if he will make a statement on the matter. [4208/12]

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I am informed by the bank that Anglo Irish Bank Corporation Limited ("the Bank") carried out liability management exercises on certain of its subordinated debt securities in 2009 and 2010 whereby the Bank offered to purchase/exchange the securities for cash/government guaranteed securities at various prices (subject to the level of subordination of the securities and the year the offer was made). It should be noted that such securities were freely tradeable once issued, dealt through market participants and settled by clearing house systems. An issuer does not have access to the records of the clearing house and therefore no means of establishing the underlying ownership. Therefore, the offers were communicated to holders via various means including stock exchange announcements, notices to holders via the clearing systems and newspaper notices (where applicable). Holders could then decide whether or not they wished to participate in the offer.

Maureen O'Sullivan

Question:

56 Deputy Maureen O’Sullivan asked the Minister for Finance since the banks were bailed out, the number of redundancies that have occurred in each of the banks that received injections of finance; in the case of each bank involved, the top ten payments that were made and the average redundancy payment worth. [4235/12]

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As the information sought by the Deputy is of an operational nature it is not held by the Department. Accordingly, I contacted the respective covered institutions, on behalf of the Deputy, to source the requested information. The position in relation to the institutions is as follows:

Institution

Number

Average(rounded)

Range of top ten payments (rounded)

AIB (overseas disposal of assets)

89

€69,000

€155,000 —€438,000

EBS (27 May 2010 on)

57

€62,800

€150,000 —€197,000

IL&P (27/06/11 to 31/12/11)

316

€90,800

€241,400 —€451,300

IBRC (Jan 2009 on)

385

€47,800

€242,000 —€747,400

I am informed by Bank of Ireland that, in the time available, it has not been possible to reply definitively on the issue. When received I will communicate further with the Deputy.

The Deputy should note that the redundancy terms which gave rise to these payments are generally no longer available due to the changed and challenging circumstances at the institutions. As I have stated previously, the Deputy will appreciate that it is an inevitable, but unfortunate, consequence of the necessary restructuring of the banking system that job losses will arise. The latest terms to be offered were at IBRC and are more reflective of the terms that will be available at the State supported banks.