Dáil Éireann Debate, Thursday - 30 September 2010
26 Deputy Arthur Morgan asked the Minister for Finance the effects on the economy here of defaulting on Anglo Irish Bank bondholders in the short term; the effects on the economy of defaulting on Anglo Irish bank bondholders in the medium term; and if he will make a statement on the matter. [34063/10]
Amharc ar fhreagraAs I indicated in my Statement earlier today much has been said about senior debt obligations in Anglo Irish Bank. The position is that senior debt obligations rank equally with deposits and other creditors under Irish law. I have no plans to change this position. There is, therefore, no question of seeking to impose losses on holders of such senior debt in Anglo or indeed in any other credit institution in the State through any legislative measures. Any alternative strategy as advocated by some creates a significant risk of jeopardising the banking system's and indeed the State's access to international debt markets and cannot be countenanced on that basis.
The principle of appropriate burden sharing by holders of subordinated debt, however, is one with which I agree. As can be seen from the figures outlined above, the losses in the bank are substantial and it is right that the holders of Anglo's subordinated debt should share the costs which have arisen.
In keeping with this approach, my Department in conjunction with the Attorney General is working on resolution and reorganisation legislation, which will enable the implementation of reorganisation measures specific to Anglo Irish Bank and INBS which will address the issue of burden-sharing by subordinated bondholders. The legislation will be consistent with the requirements for the measures to be recognised as a re-organisation under the relevant EU Directive in other EU Member States.
I expect the subordinated debt holders to make a significant contribution towards meeting the costs of Anglo.
