Following the Transfer of Its Assets to the National Asset Management Agency (NAMA) In

“That DáilÉireann:

noting that:

— following the transfer of its assets to the National Asset Management Agency (NAMA) in 2010, Anglo Irish Bank was left with toxic debt of €30.6 billion;

— from March to December 2010 the Government issued a series of promissory notes to Anglo Irish Bank and Irish Nationwide Building Society totalling €30.6 billion;

— these promissory notes placed an obligation on the State to pay Anglo Irish Bank €30.6 billion;

— the interest rate charged on these loans by Anglo Irish Bank will cost the State an additional €16.6 billion;

— this debt, totalling €47 billion, amounts to 27% of the State’s debt-to-GDP ratio;

— the repayment of this debt will take place over a twenty year period from 2011 to 2031;

— as the State will have to borrow money to service this debt, it is reasonable to assume that an additional cost of at least €28 billion will be incurred by the State in interest payments on monies borrowed to pay the €47 billion to Anglo Irish Bank;

— this additional cost is calculated at an interest rate of 4.7% based on average cost of funds raised by the National Treasury Management Agency (NTMA) in the bond market in 2009 and 2010;

— on this basis, the cost to the State and the taxpayer arising from the promissory notes will be at least €74 billion up to when the final payment is made in 2031;

— a number of economists argue that this is a conservative estimate and the cost of servicing this debt will be much higher, possibly four times greater than all the combined ‘austerity’ spending cuts and tax increases to date;

— the first transfer of money to Anglo Irish Bank arising from promissory notes took place on 31st March, 2011, totalling €3.1 billion;

— annual transfers of €3.1 billion will be made every year on 31st March from 2011 through to 2023;

— from 2024 the annual transfers will gradually decrease from €2.1 billion in 2024 to €0.1 billion in 2031;

— these annual payments do not include the additional cost of the interest on monies borrowed to service the €47 billion transfer to Anglo Irish Bank;

— alongside these payments Anglo Irish Bank, now operating as Irish Bank Resolution Corporation, will continue to use taxpayers’ money to pay unguaranteed, unsecured senior bondholders;

— on 2nd November, 2011, the Government allowed Anglo Irish Bank to pay a single unguaranteed, unsecured senior bond to the value of $1 billion despite enormous public opposition;

— on 25th January, 2012, Anglo Irish Bank will pay out a single unguaranteed, unsecured bond to the value of €1.2 billion;

— on 28th June, 2012, Anglo Irish Bank will pay out a single unguaranteed, unsecured bond to the value of €454 million; and

— twenty four additional unguaranteed, unsecured senior bonds with a combined value of €800 million will be paid out from January 2012 through to April 2018;

agrees that:

— the former FiannaFáil/Green Party Government were wrong to issue these promissory notes;

— this decision undermined the public finances, increased the deficit and damaged the social and economic stability of the State;

— the current Fine Gael/Labour Government must make clear that it is not in a position to pay this toxic private banking debt;

— the Taoiseach, Enda Kenny T.D., and the Minister for Finance, Michael Noonan T.D., should enter into immediate discussions with the European Central Bank to have the promissory note withdrawn and to remove this toxic private banking liability from the State and the taxpayer;

— the Government should seek support from our European partners in this endeavour on the grounds that removing the obligation created by the promissory note would reduce our debt-to-GDP ratio to approximately 87%, easing the State’s transition back to the international bond markets and assisting in reducing the deficit and returning the economy to sustainable social and economic development; and

— the practice of using taxpayers’ money to repay the promissory note must end; and

calls on the Government to intervene to prevent Anglo Irish Bank from using taxpayers’ money to repay unguaranteed senior bondholders.” — Pearse Doherty, Gerry Adams, Michael Colreavy, Seán Crowe, Dessie Ellis, Martin Ferris, Pádraig Mac Lochlainn, Mary Lou McDonald, Sandra McLellan, Jonathan O'Brien, Caoimhghín Ó Caoláin, Aengus Ó Snodaigh, Brian Stanley, PeadarTóibín.