Administrative costs of some €15 million have been incurred in stabilising the State's banking system, according to the annual report of the Comptroller and Auditor General (C&AG) published today.
These costs included payments of over €7 million to a financial-consultancy firm and almost €4 million to a law firm.
The report found there had been "very significant recourse" to the services of legal, financial and economic advisers in addressing problems in the banking sector.
The C&AG says these services were necessary due to the "very technical" issues involved and the need to finish work within a short time frame. There were also "significant internal costs" related to staff working on the design and implementation of the stabilisation measures.
The National Treasury Management Agency paid €7.3 million to Merrill Lynch for investment-banking advice, while the Financial Regulator paid €2.95 million to PriceWaterhouseCoopers and €0.84 million to Jones Lang LaSalle for financial and property-consultancy services involved in bank guarantees.
The C&AG reports that up to the end of May 2009, the Department of Finance had paid €3.9 million to Arthur Cox Solicitors for legal advice relating to the bank guarantee scheme, the recapitalisation of banks and the nationalisation of Anglo-Irish Bank. In July 2009, the Department invoiced the credit institutions covered under the scheme some €2.5 million in recoupable costs, including €1.6 million in legal expenses.
The expenses of the Minister for Finance relating to the nationalisation of Anglo Irish are recoupable from that bank under Section 33 of the Anglo Irish Bank Corporation Act 2009. According to the Department, the expenses will be charged "in due course".
The agreement for Anglo's recapitalisation also stipulates the bank will reimburse the Minister for the costs relating to the execution of the agreement. The C&AG said these costs were being worked out and would be charged on completion of the recapitalisation process.
The report also reveals the Regulator levied fees of €3.4 million on the relevant institutions up to the end of December 2008.
The State has spent €10 billion on banking stabilisation measures up to the end of June 2009, according to the report. Within that figure, €3.5 billion was invested in preference shares in Bank of Ireland, €3.5 billion invested in preference shares in AIB, and €3 billion invested in the State-owned Anglo Irish Bank. A further €1 billion is expected to be invested in Anglo Irish Bank soon, the report added.
The C&AG noted the financial implications for the State of the proposed National Asset Management Agency have yet to be determined.
