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IL&P reveals state bond deals worth €2bn
07 March 2010 By David Clerkin, Markets Correspondent
Irish Life & Permanent (IL&P) acquired €2.2 billion in Irish government bonds last year - 10 per cent of the exchequer’s borrowing requirements - despite borrowing almost the same amount from the state owned Anglo Irish Bank.
Regulatory disclosures by IL&P reveal the company, whose subsidiaries include Permanent TSB, increased its holdings of Irish government bonds by €2.2 billion during 2009.
The disclosures also reveal that Anglo had placed €1.9 billion on deposit with IL&P, which included money deposited with IL&P as part of a repurchase agreement involving the bank’s securities.
IL&P described its dealings in Irish government bonds, including securities issued by semi-state bodies, as part of its ‘‘normal course of business’’.
The government increased its borrowings by €25 billion during 2009 through the issue of bonds. It also issued a further €10 billion in bonds to refinance existing debt of €5 billion and pre-fund €5 billion of its 2010 borrowing requirements.
IL&P’s filings also reveal that, at the end of December, the National Treasury Management Agency (NTMA), the state’s specialist cash management arm, had deposited an additional €450millionwith IL&P, and that IL&P had lent €375 million to Anglo.
IL&P attracted major controversy last year when it emerged that the company had facilitated a series of transactions with Anglo in 2008, prior to Anglo’s nationalisation, which artificially boosted Anglo’s deposit base around its year-end in September 2008.
The controversy resulted in the resignations of then IL&P chief executive Denis Casey, finance director Peter Fitzpatrick and treasury chief David Gantly.
Accounting rules have required IL&P to disclose extensive details of its dealings with Anglo following Anglo’s nationalisation.
The companies are now deemed to be so-called ‘‘related parties’’ as a result of Anglo becoming state-owned and IL&P becoming reliant on state support in the form of the government’s guarantee covering certain liabilities.
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