Consultants continue to cash in on Irish bank liquidation bonanza

23 May 2017 Consultancy.uk

The bill for consultants, liquidators and lawyers involved in the winding-down of the Irish Bank Resolution Corporation (IBRC) amounted to €215 million in the 47 months leading to the end of 2016, according to a recent progress update, with the Irish arm of multinational consultancy KPMG receiving a total of €130 million for its role in the proceedings.

On the basis of the recently published paper submitted by administrators, in addition to the €130 million KPMG Ireland received for its services, €85 million were spent on consultation regarding legal and financial matters from fellow “Big Four” professional service firms PwC and Deloitte. The height of the festival that KPMG assumes as governor led to questions in the Irish parliament in 2015.

IBRC’s liquidation has been a complex and costly burden on the Irish government’s purse for some time — beginning when The Anglo Irish Bank was nationalized due to the global financial crisis in 2009, before merging with the Irish Nationwide Building Society in 2011, forming the IBRC as it is known today.

The bank later entered into special liquidation in February 2013, when a now infamous all-night session at the Dáil – Ireland’s national parliament – ended in the passing of a bill issuing the IBRC an immediate winding-down order. On the same night, the previous's board of governance was replaced by KPMG administrators – who in their last progress update in June 2014 reported the fee for liquidation stood at €112 million – a net figure of a €7 million rebate the accountancy specialists had agreed with the Ministry of Finance at that time. In recent figures released to the Dáil by Irish Finance Minister Michael Noonan, partners at KPMG Ireland were stated as receiving up to €295 per hour excluding VAT in connection to the work.

Big Four consultancies cash in on Irish bank liquidation bonanza

Along with a number of other professional service firms, the accountancy specialists will continue as administrators in preparation for a growing number of litigation cases – which the same 2016 stated as a “key risk” to completion. The nationalisation and liquidations of IBRC had led to a total of 356 sets of legal proceedings being managed at that time, and while this year sees just 143 cases remaining, they are expected to last several years.

Continuing process

The declarations of state spending on IBRC’s administration are the latest in a long list of headlines featuring the bank since 2008. Notably, the bank caused uproar regarding public spending when it was revealed the fire-sale of building and utilities service company Sitserv had been undervalued by €9 million. Sitserv owed IBRC €150 million at the time of the transaction, and a release of IBRC’s board meeting minutes from 15 March 2012 disclosed that the company was sold for €45 million with a €5 million pay-out to shareholders as part of the deal.

This figure amounted to a reported write-down of €119 million, more than the previously reported figure of €110 million, according to the minutes, which were released in 2015. Following the controversy, a Commission of Inquiry was established to investigate all post-nationalisation transactions that resulted in any losses over €10 million, including the sale of Siteserv among other transactions. While the same governmental review last year stated that there was “no stateable case” of negligence against KPMG in particular, the matter is considered “ongoing”

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