IFSC-BASED LAMBAY Capital Securities plc, which held £300 million (€343 million) in Anglo Irish Bank preference shares, has been pressurising the Government to establish the compensation system for shareholders who lost out when the institution was nationalised in January.

Lambay has published details of correspondence between the company and the Department of Finance on the Luxembourg stock exchange.

Lambay floated a series of investment instruments linked to its holding in Anglo Irish on the Luxembourg market. The company wrote to the department several times over the past three months to find out when the Government will appoint an assessor who will decide on compensation for the bank’s former shareholders and investors.

The State took ownership of Anglo Irish in January, as it feared that the bank was insolvent. The Government also had concerns about up to €127 million in secret loans given to former chairman, Seán FitzPatrick.

When the bank was nationalised, its shares were transferred to the Minister for Finance. The law transferring the institution to State ownership committed the Government to appointing an independent assessor to decide on the compensation, if any, that should be paid to shareholders.

Lambay originally wrote to the department in June, and an official replied stating Brian Lenihan intended to “advance the process” and announce the assessor’s appointment in due course.

However, the company replied in July saying “our bondholders expect a more detailed answer to the question of exactly when an assessor will be appointed, which would enable us to make an announcement to them of the anticipated timeframe for payment”.

Lambay received no reply and wrote again in August. The department apologised for the delay and told Lambay that: “Preparatory work on the process to appoint an assessor is under way in the department with a view to making early progress on an appointment after the summer period”.

The Department of Finance told The Irish Times that work on the appointment of the independent assessor is under way. Lambay held preference shares in the bank. While these have been transferred to the Minister, the company issued loan notes secured against the preference shares and floated these on the Luxembourg stock exchange. The notes did not transfer to the Minister, but the preference shares against which they are secured did. This means the State may have to compensate the company, which in turn will have to pay the investors who bought its loan notes.

Preference shares are a means of borrowing money. They are generally issued for set periods of time, with set interest payments, and can be bought and sold in the same way as ordinary stock.

Once the period is up, the company that issued the shares repays the original sum paid by the preference shareholders, along with the interest.

Lambay’s accounts show that Anglo Irish paid it €27 million in interest in 2007.

Returns filed with the Companies’ Registration Office show that a series of charitable trusts, Badb, Eurydice and Medb, with addresses at Sir John Rogerson’s Quay, Dublin, own most of Lambay’s shares.

Its directors are: Brian McDonagh, a businessman with interests in re-insurance and other financial services; and Werner Schwanberg, a managing director of Dresdner Bank (Ireland), who was also active in the German Irish Chamber of Commerce.