The former chief executive of the Irish Bank Resolution Corporation (IBRC) has rejected suggestions the bank was too close to billionaire businessman Denis O'Brien.
Mike Aynsley was chief executive of the State-owned bank when it approved the sale of building services group Siteserv to Mr O'Brien in a transaction that cost the taxpayer €110 million in 2012.
In an interview with The Sunday Business Post yesterday, Mr Aynsley also defended the manner in which Mr O'Brien was selected as winning bidder for the company.
He said the decision to allow Mr O'Brien to bid, despite having borrowings with IBRC – the successor to Anglo Irish Bank – was aimed at securing the highest possible return.
Mr Aynsley said the bank was aware Siteserv was likely to bid for the State’s water-metering contract, but the tender was a long way off and there was no way it could have predicted it would be successful.
Economic value
The sales process surrounding the company involved followed an established template for other recovery operations, he said. “The winner was selected on the basis of the best economic value to the bank and certainty of closure.”
An internal deal team was established and external advisers appointed to provide independent comfort to the bank around the process being run by Siteserv, Mr Aynsley said.
A subcommittee of Siteserv's board handled the sale process. The bank also had an independent representative on the committee, Walter Hobbs, to provide oversight of other key advisers such as Davy Stockbrokers and KPMG Corporate Finance.
“As creditor, IBRC had no standing to appoint advisers to sell the company without serving demand or putting in a receiver and taking control of the company. The decision to appoint Davy was seen as satisfactory and supported by IBRC,” Mr Aynsley said.
Winning bidder
Mr O’Brien’s selection followed a recommendation by Davy/ KPMG, Siteserv’s board and Mr Hobbs. The decision was ratified by IBRC’s board.
Mr Aynsley said conditions were attached to other bids which indicated the eventual return to the bank could be subject to significant “chipping”. “The O’Brien bid was noteworthy as having substantially less such risk,” he said.
A third bidding round was dismissed on the basis additional benefits were unlikely.
Mr Aynsley also defended the decision to allow Mr O’Brien and other borrowers to bid for the contract. “The decision to do so was aimed at achieving the highest possible return by not excluding well-funded buyers,” he said.
He said the high profile of Mr O’Brien was considered as a factor in the bank’s risk assessment. “The decision was to accept the bidder offering the highest economic value to the bank, with the most likely closure at that level,” he said.
