RUSSIAN BILLIONAIRE Roman Abramovich may take legal action against the Government over its decision to make subordinated bondholders in Irish Nationwide (INBS) pay part of the bill for dealing with the building society’s huge property losses.

“We urge Irish authorities to reconsider their position on INBS subordinated bonds and come out with a detailed plan on what is going to happen to this institution,” a statement from Abramovich’s investment vehicle Millhouse said in a statement. “In the meantime, we are fully prepared to vigorously defend our position using all possible legal means.”

Minister for Finance Brian Lenihan said that he expected bondholders in INBS and nationalised lender Anglo Irish Bank to make “a significant contribution” towards meeting the cost of a bill of up to €40 billion for cleaning up their years of reckless lending.

Both bonds are trading at significant discounts in the secondary market.

Anglo Irish Bank, which has €2.4 billion in subordinated bonds, accounts for over two-thirds of Ireland’s “worst case” bank bill of €50 billion. INBS will cost taxpayers €5.4 billion.

Mr Abramovich’s investment vehicle said making INBS subordinated bondholders accept losses on their investments was unfair and possibly illegal. “We fail to see how we can ‘significantly contribute’ to the cost of survival of the Irish Nationwide Building Society, given that even, if the entire lower tier 2 debt is wiped out, it would only save a meagre 2.3 per cent of the total cost of [the] bailout of INBS.”

A spokesman for the Department of Finance said it was working with the Attorney General on the issue of burden-sharing by subordinated bondholders in Anglo and INBS.

The Daily Telegraph reported yesterday that hedge funds were fighting efforts by the Government to pay no more than the current market price for their holdings of subordinated debt. Mr Abramovich, owns Chelsea Football Club, and is Russia’s fourth richest man.