Top Irish investors lose out in finance firm write-off (The Irish Times)

04 November 2011

International Securities Trading Corporation (ISTC), which was set up in 2005 by former Anglo Irish Bank executive Tiarnan O'Mahoney, yesterday suspended trading in its shares, postponed its results and scrapped plans to raise €150 million through a bond issue.

The highly specialised firm, which raises money on international markets to lend to banks, made the decision after writing off at least €70 million on investments totalling €210 million in high-risk financial units called structured investment vehicles (SIVs).

SIVs have been hit particularly badly by turmoil in the financial markets caused by the US subprime mortgage crisis.

These vehicles rely on raising short-term funds to finance long-term investments that offer greater returns.

Mr O'Mahoney said that, as a result, ISTC would post a loss of at least €55 million for the year to September 15th, 2007, compared to a forecast profit of €15 million.

He could not say whether the company would write off more than €70 million. "In the current market environment, we cannot rule that out," he said.

ISTC will meet its banks this week to negotiate new borrowing terms and to seek alternative funding for the €150 million it had planned to raise in a bond issue. The firm had intended to use this money to protect it against any unforeseen shocks.

Although the firm is not controlled by the Financial Regulator, the watchdog is monitoring the exposure of Irish banks to ISTC.

The finance firm has lent money to some of the country's main banks. Two of the largest banks, Anglo Irish Bank and Bank of Ireland, are known to have no exposure to the difficulties at ISTC.