Irish Said to Reap Central Bank Payment of About $2.4 Billion

(Bloomberg) -- The Irish government snagged a payment of about 2.1 billion euros ($2.4 billion) from the country’s central bank, according to a person familiar with the matter.

The transfer flowed from the bank’s 2018 earnings, said the person, who asked not to be named as the information is private. Details will be published with the regulator’s annual report on Wednesday in Dublin. The bank declined to comment.

The bank posted a financial profit of about 2.6 billion euros in 2017 and handed over surplus income of about 2.1 billion euros. The 2018 payment is of a similar scale, the person said.

Most of the central bank’s profits stem from its holding of securities tied to the liquidation of the Irish Bank Resolution Corporation Ltd., set up to deal with failing institutions including Anglo Irish Bank Corp. during the financial crisis.

In 2013, the nation’s debt office issued about 25 billion euros of long-term bonds, giving them to the central bank in exchange for so-called promissory notes. The central bank had used these notes to prop up much of the banking system as it flirted with collapse.

To an extent, the profit and transfer is a circular affair. The central bank’s profits are linked to interest paid by the state on the securities, as well as debt office buy backs. In March, the debt office said it had bought back 14.5 billion euros, in nominal terms, of the notes, and added another 500 million last week.

To contact the reporter on this story: Dara Doyle in Dublin at ddoyle1@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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