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Document Type

Case Study

Case Series

Ad hoc Emergency Liquidity Programs

Abstract

At the height of the Global Financial Crisis in September 2008, Anglo Irish Bank (Anglo), one of Ireland’s six core banks, specializing in commercial and residential real estate with EUR 101.3 billion in assets, faced severe losses. Irish authorities announced a blanket deposit and liability guarantee for the six banks including Anglo. At the same time, Anglo was offered standby liquidity facilities of EUR 3 billion from the Central Bank of Ireland (CBI) and EUR 10 billion from the two largest Irish commercial banks, which were not drawn on at the time. Anglo was nationalized in January 2009, as deposit outflows and losses persisted. By March 2009, Anglo had accessed emergency liquidity assistance (ELA) of EUR 23.5 billion from the CBI, against collateral that did not qualify for Eurosystem monetary operations. The Irish government provided Anglo an initial capital injection of EUR 4 billion in May 2009. In 2010, the government provided to Anglo an additional EUR 25.3 billion of capital in four tranches of fixed-rate promissory notes (PNs)—liabilities of the government—which could be further provided to the CBI as collateral to access the ELA facility. By the end of 2010, Anglo’s use of the ELA grew to EUR 28.1 billion. Between 2010 and 2011, Anglo’s ELA borrowings were increasingly secured by only a government guarantee. In July 2011, Anglo merged with an Irish housing bank, or building society, to form Irish Bank Resolution Corporation (IBRC). The CBI’s emergency lending facility to Anglo ended with the liquidation of IBRC in February 2013. At the liquidation, the CBI took ownership of the PNs and other government obligations from Anglo. The Irish government exchanged the outstanding PNs with the CBI for marketable floating-rate sovereign notes worth at least EUR 40 billion. This helped reduce the Department of Finance’s interest costs and allowed the CBI to manage the monetary impact of the repayment of the Irish state’s debts over time.

Date Revised

2025-04-15

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