Anglo moves to secure Quinn takeover deal
State-owned Anglo Irish Bank tonight moved to strike a deal with the Financial Regulator to secure the takeover of Quinn Insurance.
Quinn Insurance, owned by tycoon Sean Quinn, once the country’s richest man, is in administration after the watchdog raised concerns over its ability to pay an influx of claims.
Talks are expected to run over the weekend between regulator Matthew Elderfield and executives at nationalised Anglo after the bank tabled the bold bid based on securing debts and refinancing the firm.
Taoiseach Brian Cowen said there were concerns over jobs at the wider group but negotiations were being held to assess the plan before a High Court hearing on Monday.
It is understood Finance Minister Brian Lenihan will accept the regulator’s verdict on the proposed buy-out.
The Quinn Group was expected to fight administration after the regulator dramatically moved to wrest control last week.
Liam McCaffrey, Quinn Group chief executive, revealed the insurance wing needs up to €150m to get back on a sure footing.
But he denied allegations it was facing a €700m black hole in its books.
Anglo, which will ultimately be refinanced by the Irish taxpayer to the tune of €22bn, is owed €2.8bn by the Quinn family after a complex share deal turned sour.
Mr McCaffrey said: “We will work very hard with anybody, Anglo-Irish Bank or anybody else, to make sure that the future of Quinn Insurance is robust and protected.”
It is understood the plan centres on ensuring Anglo secures money it is owed while at the same time keeping Quinn Insurance operating as a going concern.
The company detailed the state of its finances and insisted access to money was not an issue in the event of massive claims.
It said Quinn Insurance holds €800m cash and the Quinn Group, which generated cash profits of about €47m in the first three months of this year, holds €70m in reserve.
The regulator’s priority is protecting the insurer’s one million customers, officials also said.
If a deal is acceptable it is likely Monday’s High Court case on permanent administration will be adjourned.
But Government officials suggested it could flounder if Quinn does not agree to management changes at the very top.
Joan Burton, Labour’s finance spokeswoman, called on Mr Lenihan to explain why large scale investments by nationalised Anglo, and any potential financial exposures, were not officially made public.
“There needs to be full disclosure, in particular, of any potential losses or liabilities for the state arising from Anglo’s involvement with the Quinn Group,” she said.
“The board of Anglo should not have carte blanche to increase the state’s exposure without the specific approval of the Dail.”
She added: “This whole crisis is a vital test for the new regulatory regime. If the regulator is not allowed to do his job on this issue, then Ireland’s reputation will be further damaged.”
Earlier, Mr McCaffrey rejected claims the insurance group had bent the rules when reporting Quinn’s solvency levels to the regulator as far back as 2005.
“To say it is playing fast and loose I think is a little unfair, suffice to say we know that we are below the minimum solvency, we know that a plan was submitted to the regulator to have that restored by the year end, and that was being worked through,” he told RTE.
The company said a cash injection of €100-€150m would restore Quinn Insurance’s solvency levels.
One of the issues facing Quinn is guarantees certain divisions of the company gave over debts dating back as far 2005 – Anglo is owed the €2.8b from the family while the group owes €1.2bn to other influential lenders.
Mr McCaffrey said guarantees were disclosed in annual reports of subsidiaries however the regulator has claimed they were not included in quarterly solvency reports.
A planned demonstration by some of Quinn’s 5,000 workforce at the regulator’s headquarters in Dublin was postponed today.
It is understood worried employees decided to call the protest off in a gesture of good faith and to give Mr Elderfield time to review administration and Anglo’s plan.
The Taoiseach first became involved in the affair over the Easter break and spoke directly to Mr Quinn on the phone.
Meanwhile, Green Party Senator Dan Boyle, the party’s finance spokesman, insisted the regulator must be seen to be independent.
“The Green Party argued for the appointment of a Financial Regulator from outside of Ireland to put maximum distance from the discredited system of financial regulation that had been in place and which helped cause so many of the difficulties that exist with Irish financial services,” the finance spokesman said.
