Annual Report & Accounts 2009 - Anglo Irish Bank

Loans to co-ownership structures
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Loans to connected persons
Guarantees
Anglo Irish Bank
Annual Report & Accounts 2009
The facility was provided to finance the acquisition of commercial property. The facility was initially approved in
November 2002, the most recent renewal was in April 2006 and it is due to expire in June 2020. The margin on the loan
is between 1.25% and 1.35% and there was an arrangement fee of €92,350 charged on previous facilities. It is secured
and there is several recourse on a pro rata basis to the investors for 30% of the loan. The senior debt is on interest only
repayment, the remainder is on principal and interest repayment and there is a bullet repayment due at maturity. There
is a derivative financial instrument connected with the account with a mark-to-market valuation in favour of the Bank of
€784,864 at 31 December 2009.
The facility was provided to finance the acquisition of a property. The facility was initially approved in January 2006 and
it is due to expire in December 2016. The margin on the loan is between 1.25% and 2.5% and there was an
arrangement fee of €125,000. It is secured and the investors are severally liable to their share of the co-ownership or prorata
to their beneficial interest in the property, limited to a combined maximum of €3.99m. Capital and interest
repayments are due quarterly. There is a derivative financial instrument connected with the account with a mark-tomarket
valuation in favour of the Bank of €1,593,911 at 31 December 2009.
The Companies Act, 1990 as amended by the Companies (Amendment) Act, 2009 requires a statement in relation to
transactions, arrangements and agreements made with persons who at any time during the period were connected with a
Director of the Bank if such a transaction, arrangement or agreement was (a) not entered into in the ordinary course of its
business, or (b) its value is greater, or its terms more favourable, in respect of the person for whom it is made, than that or
those which (i) the Bank ordinarily offers, or (ii) it is reasonable to expect the Bank to have offered, to or in respect of a person
of the same financial standing but unconnected with the Bank.
Loans with an aggregate balance of €255m at 31 December 2009 (maximum balance during the period: €296m) could be
considered to have been made on such terms as outlined above. The number of persons at 31 December 2009 for whom such
arrangements subsisted was 16 (maximum during the period: 17). For the purpose of making such a determination the Bank
considered the relative commerciality of the loan arrangements having regard to their security, margin, recourse and purpose.
The phrase ‘connected persons’ includes persons who are in partnerships, as defined under section 1(1) of the Partnership Act,
1890, with a Director. Of the €255m balance at 31 December 2009, €238m relates to persons who were connected to
Directors solely by virtue of the fact that they had invested into a partnership structure in which a Director of the Bank had also
invested.
The Bank had provided guarantees to third parties in relation to Sean FitzPatrick and Lar Bradshaw’s investment in oil
exploration. The total amount for which the Bank was liable at 31 December 2009 was €nil (30 September 2008: €0.8m).
Payments of €1.6m (€0.7m of which related to a guarantee provided during the period) were made to third parties under the
terms of the guarantees. These payments formed part of the overall transaction arrangements, were expected from the outset
and were not called upon as a result of non-performance.
The Bank provided a counter indemnity in respect of a guarantee issued by another Bank in relation to a partnership structure in
which Lar Bradshaw had invested. The total amount for which the Bank was liable at 31 December 2009 was €20,000
(30 September 2008: €20,000). No liability was incurred by the Bank during the period for the purpose of fulfilling the
guarantee.
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