Ireland has secured an agreement in principle with the European Central Bank to restructure the cost of the nation’s rescue of the former Anglo Irish Bank, according to two people familiar with the matter.
The agreement is contingent on Irish cabinet approval, said the people, who asked not to be identified as the matter is private. Officials from the Irish Finance Ministry, the central bank in Dublin and the ECB in Frankfurt declined to comment.
Irish officials have been trying to reach a deal with the ECB for the past 1 1/2 years over an issue that has dogged the country’s attempts to work its way out of an international aid package agreed in 2010. Eamon Gilmore, Ireland’s deputy prime minister, called Anglo Irish the worst lender in the world as loan losses led to a 30 billion-euro ($41 billion) bailout.
“On Ireland, let me say this -- there wasn’t a decision to take,” ECB President Mario Draghi said at a press conference in Frankfurt today. “The Governing Council unanimously took note of the Irish operation and I’m going to refer you to the Irish government and the Irish central bank for the details of this operation. I can only say that we took note of this.”
ECB policy makers sought more time yesterday to weigh a proposal presented by Ireland to restructure the cost of bailing out Anglo Irish, which was renamed Irish Bank Resolution Corp. in 2011, according to people familiar, prolonging a saga that began four years ago with the near-collapse of the lender. Lawmakers passed laws in the early hours of this morning to liquidate IBRC as a first step of the broader blueprint.
Ireland has been seeking to swap promissory notes used to rescue Anglo Irish for long-term sovereign bonds of as much as 40 years in duration, according to people with knowledge of the matter. Government ministers are set to consider the accord at a meeting starting 2 p.m. in Dublin, after which Finance Minister Michael Noonan may address parliament, one of the people said.
“We don’t want to enter into the details of the swap,” Draghi said, adding that it’s “entirely up” to actions of the Irish government and the Irish central bank.