I Don’t Know What A Shadow Bank Is




Based in a drab office building in Dublin down the road from a pub frequented by Prime Minister Enda Kenny, VPB Funding Ltd. had no employees but one function: selling bonds. In 2013, it issued $225 million of unsecured notes.

The proceeds of that sale were funneled to Vneshprombank Ltd., a Moscow lender whose license was revoked last month when Russian authorities accused management of pilfering its assets and falsifying accounts. VPB’s notes have plunged to pennies on the dollar.

The entanglement of an obscure Dublin firm in the woes of a lender 2,000 miles away shows why Irish officials have begun shining a light on special purpose vehicles like VPB, unregulated entities that borrow on behalf of corporations throughout the world.

The Irish capital, home of Europe’s costliest banking meltdown, remains a hub for the sort of opaque operations that contributed to the global financial crisis, threatening risks that policy makers are seeking to stamp out.

Russian Bank Collapse Shines Light on Risks in Irish Shadows (Bloomberg)

Shadow banking?

Thanks Rory


So, we don’t do brass plate companies in our country. So you have a plate…Apple employ 5,000 people, who go to work everyday. Obviously if you manufacture something there and you sell it in France or Italy, the intellectual property is invested elsewhere, these are the complexities and the challenges that are there.”

Enda kenny speaking at Davos in January


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19 thoughts on “I Don’t Know What A Shadow Bank Is

  1. dav

    ah, the place that John Bruton doesn’t want any regulation for, or maybe it’s just goldman sachs telling john what they want, either way when people wonder where did the trillions of QE go to, be well advised that the IFSC has facilitated in the movements of such money..

    1. Baz

      ? That’s about unscrupulous stock brokers selling penny stocks to greenhorns

      How has it relevance to a brass plate bond bank?

        1. martina

          Randomer provides random information and when asked to verify basically says FO. Your credibility is flying high tonight mate.

  2. collynomial

    Frankly, Ireland shouldn’t give a damn about the shadow banking sector unless it’s her own banks engaging in it. Ireland acts as a hub for this sort of activity, and it should be up to the broader European/International supervisory community to do something about it.

    I would be far more worried about the size of the banking assets to GDP, where we match roughly speaking Switzerland and have a higher ratio than Italy, Netherlands, Germany etc.

    Banking assets are what the Irish taxpayer will ultimately be on the hook for, therefore it is the Irish supervisors responsibility to ensure as few of those assets as possible are invested in the liabilities of the shadow banks.

    1. meadowlark

      We are the Cayman islands of Europe… Is that what I’m reading?

      Puzzled from Norwich

    2. Harry Molloy

      Its truce that banks should perform their own due diligence before engaging spvs but I wonder should the cro conduct such diligence on the spv if it’s incorporated here?

      1. Harry Molloy

        On re reading there was probably nothing to indicate any concerns prior to the Russian authorities investigation.

        Suppose it goes back to caveat emptor, if you’re Finns buy bonds make sure they’re not from Russia!

    3. Owen C

      We will not be on the hook for non-Irish HQ’d finance firms, it will be the country of origin who will have to deal with it (ie a Russian finance firm is considered Russia’s problem, ditto all of the German landesbanks that got into trouble during the crisis).

      As such, we do not actually care that much about the assets of these entities. We care about the liabilities, ie their creditors such as bondholders, equity holders, depositors etc. And again, all of the liabilities tend to be international in nature. So this issue is one more about reputation rather than money/cost of collapse.

  3. Sam

    No brass plate companies, me b0££ick$

    BAE, the giant UK arms company has a brass plate company in Dublin that was set up as a Homeless Charity – they ‘donate’ any surplus to homelessness, yet magically, their ‘costs’ always perfectly match the revenue funnelled through it, so unluckily they’ve never had any surplus to help the homeless.

    Arbutus Homeless Person’s Trust is run by Goodbody Trustees Limited, a company set up by A&L Goodbody, a well-known law firm in Dublin. The trust was set up in 1997,” according to BAe.

    The indo reported on it a few years back, several years after the FT had mentioned it in a large feature.

    1. Harry Molloy

      Hence the need for the charities regulator!! Haven’t heard much since it was set up, I would hope this type of issue would be a priority

      1. Kieran NYC

        I heard a trickle of stuff a couple of weeks ago – a Donegal charity with five or six separate bank accounts or something? I would imagine it’s an underfunded, slow but steady kind of regulator.

  4. Maria

    Ah good old A&L Goodbody …… the irony of that name …… they are the ones who looked after the stunt pulled on the Clerys workers ….. Lest we forget ….

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