IBRC annual report for 2011 - Irish Bank Resolution Corporation ...

More documents

Recommendations

Info

Chairman’s statement continuedConclusionThe Bank has made significant and welcome progressthroughout 2011. The integration of INBS is well advanced anda fit for purpose organisation is now in place for the nextphases of the Bank’s wind-down. With the prevailinguncertainty in European debt markets looking likely tocontinue for much of 2012, IBRC will no doubt be presentedwith further challenges as it delivers on its objectives in thecoming year. The management and staff of the Bank will havethe full support and confidence of the Board in meeting thesechallenges.On behalf of the Board, I sincerely thank the management andstaff of the Bank for their continued professionalism and hardwork which contributed to the progress achieved in 2011. Inaddition, I thank the Minister for Finance and the staff of theDepartment of Finance and the Central Bank of Ireland forworking closely with the Bank throughout the year.Alan DukesChairman28 March 20124
Group Chief Executive’s reviewIrish Bank Resolution Corporation LimitedAnnual Report & Accounts 2011The twelve months to 31 December 2011 saw a period ofsignificant change and welcome progress for the organisation.Following the focus on stabilising and de-risking Anglo IrishBank in 2010, and the development of a restructuring plan forits future, a number of major initiatives were successfullyconcluded throughout 2011.Key restructuring eventsEuropean Commission approval of the Bank’srestructuring planA joint restructuring and work-out plan for the Bank and IrishNationwide Building Society (‘INBS’) (the ‘Restructuring Plan’)was submitted to the European Commission (‘EC’) on31 January 2011. This Restructuring Plan provided for themerger of the Bank and INBS following the transfer of themajority of the deposit books and NAMA senior bonds of bothentities to other Irish financial institutions. Those transfers tookplace on 24 February 2011 and the EC, under EU State aidrules, approved the Restructuring Plan on 29 June 2011. Thisapproval cleared the way for the planned merger to proceedwith the subsequent work-out of the combined entity over aperiod of up to ten years. A number of commitments were alsomade to the EC as part of the Restructuring Plan in relation tothe State aid provided to the Bank. A Monitoring Trustee wasapproved by the EC on 8 December 2011 to report on theGroup's adherence to these Restructuring Plan commitments.Transfer of the Bank’s deposits to Allied Irish Banks,p.l.c. and AIB Group (UK) p.l.c.Following a Direction Order made by the Irish High Court on8 February 2011 under the Credit Institutions (Stabilisation) Act2010 (‘CISA’) and pursuant to a Transfer Order made by theHigh Court under CISA on 24 February 2011, the Banktransferred the vast majority of its Irish and UK customerdeposits to Allied Irish Banks, p.l.c. (‘AIB’) and AIB Group (UK)p.l.c. (‘AIB UK’), together with its NAMA senior bonds and itsIsle of Man subsidiary. This was a significant and complexproject for the Bank to manage in a short timeframe. It had theeffect of reducing the balance sheet of the Bank byapproximately €11bn and over 200 staff transferred to AIB andAIB UK as part of this process.Merger with INBS and subsequent name changeOn 1 July 2011, pursuant to the Restructuring Plan, all of theassets and liabilities (with the exception of certain limitedexcluded liabilities) of INBS transferred to the Bank. This wasunder a further transfer order made by the Irish High Courtunder Section 34 of CISA (the ‘INBS Transfer Order’).Upon successful completion of the merger with INBS, the Bankwas renamed on 14 October 2011 as Irish Bank ResolutionCorporation Limited, and now trades as IBRC. With effect fromthe same date, the names of the Bank’s two key Irish regulatedsubsidiaries were also changed, with Anglo Irish MortgageBank becoming IBRC Mortgage Bank and Anglo IrishAssurance Company Limited becoming IBRC AssuranceCompany Limited.This name change is significant as we move on from the past.As the infamous names of Anglo Irish Bank and IrishNationwide Building Society have now been consigned tohistory, the Board, management and staff of IBRC are nowactively working with focus and determination to deal with thesignificant problems created for the State by both of theseformer institutions. Material progress has been made in thisregard as IBRC continues to take all necessary actions toachieve the mandated objectives of the new entity.Disposal of the Bank’s Wealth Management businessThe above mentioned Direction Order also contained arequirement for the Bank to formulate a detailed plan for thedisposal of its Wealth Management business. The Bankcomplied with this requirement and submitted a detailed planto the National Treasury Management Agency (‘NTMA’). Incompliance with requirements issued by the Minister forFinance under Section 50 of CISA on 7 April 2011 (the‘Ministerial Requirements’) the Bank commenced a process toevaluate all of the alternatives available for the disposal of thisbusiness.On 30 January 2012 the Bank announced that the Board hadapproved a strategy and direction put forward by managementto wind down its Wealth Management business in an orderlyfashion. This process is currently underway and may include aco-sourcing arrangement.Developments in the organisationIBRC as an asset recovery organisationSince the completion of the merger, the former Anglo IrishBank and INBS have now been reshaped into a fully integrated,fit for purpose, asset recovery organisation trading as IBRC.The Bank’s Group Executive Committee has been charged tolead the key asset recovery and support functions through thenext phases of work-out. In addition, a detailed top downprocess of organisation redesign to the level of individual rolesacross the Bank has also been completed.The Bank’s former Lending Division has been reshaped andsubstantially restructured into an asset recovery platformincorporating front office Recovery Management, SpecialisedAsset Management and Market Solutions teams. These teamslead the development and execution of recovery strategies forthe overall loan portfolio in order to promote timely andfocused asset resolution. They work proactively with bothdistressed and performing customers in all of the Bank’slocations to manage loans with the aims of minimising lossesto the taxpayer and winding down the portfolios of the Bank.The Bank has and will continue to support viable businessesand restructure distressed loans to strengthen and improveasset quality and achieve optimum recovery values. Recoveryvalues are optimised through an array of structuredrepayments, restructuring and corporate finance techniques.Reduction in loan books across all geographiesThe primary focus of IBRC continues to be the deleveraging ofits lending portfolio while maximising the return for thetaxpayer. Total gross customer loan balances declined in 2011by €10.8bn or 29% (excluding INBS additions) and amountedto €29.1bn at 31 December 2011. This material reduction inthe loan book has been primarily driven by disposals andrepayments in the US of €7.0bn and in the UK of €1.9bn.The Bank successfully disposed of the majority of its US loanbook during 2011. This process which was begun in late 2010involved individual loan sales early in 2011 combined with abulk sale of loans which was completed in a number oftranches during the final quarter of the year. This bulk loan salewas the largest transaction in the US commercial real estatemarket in 2011 which, following a competitive biddingprocess, saw three successful counterparties purchasing€5.8bn of gross assets. Reductions in the UK loan book werealso successfully executed through a combination of workingwith borrowing clients to achieve orderly repayments and aportfolio sale of the Bank’s Scottish loan book.5
Page 1 and 2: Irish Bank Resolution Corporation L
Page 3 and 4: ContentsIrish Bank Resolution Corpo
Page 5: Chairman’s statementIrish Bank Re
Page 9 and 10: Group Chief Executive’s review co
Page 11 and 12: Business review continuedIrish Bank
Page 17 and 18: Board of DirectorsIrish Bank Resolu
Page 19 and 20: Corporate Responsibility continuedI
Page 21 and 22: Principal risks and uncertainties c
Page 23 and 24: Principal risks and uncertainties c
Page 25 and 26: Report of the DirectorsIrish Bank R
Page 27 and 28: Corporate governance statementIrish
Page 29 and 30: Corporate governance statement cont
Page 31 and 32: Corporate governance statement cont
Page 33 and 34: OpinionIn our opinion:• the Group
Page 35 and 36: Consolidated statement of comprehen
Page 37 and 38: Bank statement of financial positio
Page 57 and 58:
Irish Bank Resolution Corporation L
Page 59 and 60:
Page 61 and 62:
Page 63 and 64:
Page 65 and 66:
Page 67 and 68:
Page 69 and 70:
Page 71 and 72:
Page 73 and 74:
Page 75 and 76:
Page 77 and 78:
Page 79 and 80:
Page 81 and 82:
Page 83 and 84:
Page 85 and 86:
Page 87 and 88:
Page 89 and 90:
Page 91 and 92:
Page 93 and 94:
Page 95 and 96:
Page 97 and 98:
Page 99 and 100:
Page 101 and 102:
Page 103 and 104:
Page 105 and 106:
Page 107 and 108:
Page 109 and 110:
Page 111 and 112:
Page 113 and 114:
Page 115 and 116:
Page 117 and 118:
Page 119 and 120:
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Page 139 and 140:
Page 141 and 142:
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
Page 149 and 150:
Page 151 and 152:
Page 153 and 154:
Page 155 and 156:
Page 157 and 158:
Page 159 and 160:
Page 161 and 162:
Page 163 and 164:
Page 165 and 166:
Page 167 and 168:
Page 169 and 170:
Page 171 and 172:
Supplementary information (unaudite
Page 173 and 174:
Page 175 and 176:
Page 177 and 178:
Page 179 and 180:
Irish Bank ResolutionCorporation Li
show all

IBRC annual report for 2011 - Irish Bank Resolution Corporation ...

Create successful ePaper yourself

Delete template?

Save as template?