BANK BAILOUT:THE GOVERNMENT has spent or pledged €24.35 billion in financial support to the domestic banks and building societies up to the end of July.
The report says this comprises:
€7 billion invested in Allied Irish Banks and Bank of Ireland;
€4.2 billion spent supporting Anglo Irish Bank and taking Irish Nationwide and EBS building societies into State ownership;
issuing promissory notes – State IOUs – worth €10.3 billion to Anglo, €2.6 billion to Irish Nationwide and €250 million to EBS;
the commitment by the Minister for Finance to provide up to a further €10 billion for Anglo and up to €437 million more for EBS.
This does not include potential additional costs facing the State at Anglo or the increased cost of Irish Nationwide from €2.7 billion to more than €3 billion as outlined by Central Bank governor Patrick Honohan last month.
Government agencies paid consultants €34 million to the end of July for advice on the banking crisis. Dublin law firm Arthur Cox received the most, €11.6 million in fees, followed by investment bank Merrill Lynch with €7.33 million.
Accountants PriceWaterhouseCoopers earned €6.65 million. Another investment bank, Rothschild, which took over as financial advisers from Merrill Lynch last year, received €4.54 million.
Contracts were awarded without competitive tenders to PwC, Arthur Cox and Sir Andrew Large, a former deputy governor of the Bank of England, who was engaged as “a trusted adviser”, receiving €120,000 for his work.
These contracts and those awarded to Merrill Lynch and Rothschild were “fixed-fee arrangements” and there was “no detailed vouching relating the charges to specific activities”.
The Department of Finance said in a statement that the cost of the consultants has been “more than covered” by the fees paid by the banks to State agencies.
A total €334 billion in liabilities – including deposits and bank borrowings – was covered at the end of June under the three State bank guarantees schemes. This had fallen from €440 billion when the blanket guarantee was introduced in September 2008, and €428 billion at the end of that year. Some €78 billion was covered under the deposit guarantee scheme which covers individual deposits of up to €100,000. A further €103 billion was covered under the September 2008 blanket guarantee, known as the Credit Institutions (Financial Support) Scheme. On top of this €153 billion was covered under the extended guarantee – the Eligible Liabilities Guarantee – introduced in late 2009 which allows banks to raise guaranteed funding on individual bonds of up to five years.
Just over €1 billion has been earned in fees by the Government on the bank guarantees.