THE FINANCIAL Regulator has responded coolly to a proposal from State-owned Anglo Irish Bank to take control of Seán Quinn’s business and restructure its struggling insurer in a bid to secure repayment of €2.8 billion owed by the Quinn family.
The regulator met senior Anglo executives privately on Tuesday to discuss the bank’s proposal, which was devised by the new management team at the bank. However, it is understood that the regulator is intent on progressing with its court application next Monday to confirm the appointment of administrators.
Among the proposals suggested by Anglo was that the Quinn Group be taken over by the State-owned bank, that Quinn Insurance be put on a sound financial footing with support from the bank and be eventually sold for a higher price than it would in the short term.
The bank has suggested the proposal as an alternative to the full administration of Quinn Insurance which lenders to the Quinn Group and family fear could lead to a default on loans of €4 billion.
Anglo’s shareholder, Minister for Finance Brian Lenihan, is understood to have instructed the bank to devise the best solution for the group that could recover the most amount of money for the State-owned bank.
Any alternative must not only restore the insurer’s solvency to the regulator’s minimum level but also address concerns about how the insurance firm was being managed.
Anglo’s proposals could see Mr Quinn lose control of the group he founded 37 year ago. He is understood to be open to an alternative that would avoid administration.
The bank has sought time to find a solution agreed by all the parties, including all the lenders to the group, and could achieve this if the regulator extends the provisional administration of Quinn Insurance by 30 days.
Anglo is also believed to be pressing for the regulator to allow Quinn Insurance to re-open for business in Britain and Northern Ireland. Last week the regulator ordered the insurer to stop writing business in the UK to prevent further losses.
A delegation of TDs and Senators from the Border region met Mr Lenihan last night in Dublin to express concern about the implications the appointment of the administrators may have for the 5,500 jobs in group.
The delegation included Minister for Agriculture Brendan Smith, a TD for Cavan-Monaghan. A statement issued on behalf of the Minister noted that the meeting had been constructive and also emphasised the independent nature of the regulator’s role. It also disclosed publicly the role that Anglo is now taking in discussions on the group’s future.
Speaking afterwards, Mr Smith said, “we’re not privy to the data that the Quinn company were putting together for assessment by the joint provisional administrators”.
The two court-appointed provisional administrators, Michael McAteer and Paul McCann of Grant Thornton, are preparing a report on Quinn Insurance which will be given to the regulator today ahead of the High Court hearing next week.
The Quinn Group disclosed yesterday that the Quinn family owed Anglo €2.8 billion, primarily due to losses on share investments of about €3 billion outside the group, most of which were incurred on Anglo.
The group said the guarantees provided by the insurer’s subsidiaries to its bondholders and other lenders – which led to the regulator’s court action – could be withdrawn and solvency could be restored to the insurer with a further €100 million in additional borrowings.
Mr Quinn conceded that the regulator was “technically right” to take his action but said he should have met directors before putting the company into provisional administration.
The Quinn family loans fall outside the National Assets Management Agency so any losses on these loans will be in addition to those incurred by Anglo on the loans the bank transfers to the State agency.
