Honohan Says Unique Nature of Anglo Bailout May Help Win Deal
Irish authorities are seeking to focus on the unique nature of the former Anglo Irish Bank Corp.’s bailout to try and win an accord to ease the burden of the bailout, Central Bank Governor Patrick Honohan said
“I’ve been careful to emphasise the importance of the differences that arise,” he told lawmakers in Dublin today. “It’s exploiting those features, that allow us to design a measure that would not in any damaging way leak into other situations that were not comparable and didn’t require similar solutions.”
Ireland nationalized Anglo Irish in 2009, and injected 31 billion euros into the bank and rival Irish Nationwide Building Society in the form of so-called promissory notes, a form of IOU. The lenders, which merged and renamed as Irish Bank Resolution Corp., use the notes to access cash from the country’s central bank, which is due to be paid back over more than a decade.
The government is considering injecting as much as 40 billion euros of securities of as long as 40 years into the bank, according to a person familiar with the talks in September. That would avoid the Irish state having to raise at least 3 billion euros a year for the next decade to pay down the central bank borrowing.
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