Minister for Finance Brian Lenihan insisted today the bailout of Anglo Irish Bank, which will cost a minimum of €23 billion, will not bankrupt the State.
While acknowledging the cost was “infuriating but manageable”, Mr Lenihan said he was concerned at reports the public believed Anglo could bankrupt the State.
This is "simply not the case", he said.
In an interview with RTÉ Radio's News At One, Mr Lenihan said the bank's management have put forward a proposal which suggested the cost to the taxpayer of winding up the bank could be reduced.
"Management have put forward a case that if the bank were allowed to engage in lending, it might reduce the cost to the taxpayer further," he said. "We have to evaluate that case . . . We have to make a final decision on this in a matter of weeks and give a strategic direction to the bank."
He also confirmed that the Budget will be unveiled on December 7th and would contain a number of measures that would boost confidence in the economy.
Mr Lenihan is meeting European Union competition commissioner Joaquin Almunia in Brussels today to discuss the €25 billion rescue of the State-owned bank. He said today it was important that Ireland held its nerve.
"We will not be distracted by those who suggest that there is some kind of quick fix where you can bust the country and magically stage a resurrection," he said. "There is no economy in the world that has done that. It has been tried in various Latin American countries and it has led to a deep freeze for a long number of years in any country where it was attempted."
Mr Lenihan said a "great deal" of confidence had been expressed in the Government abroad and the upcoming Budget would include measures to help boost confidence abroad.
"The Budget will not just be about the public finances, although clearly the public finances are a very important element of it," he said.
The bank guarantee would be phased out gradually, he said.
A spokesman for the Department of Finance today said keeping a part of Anglo open for business remains an option. "There are two options, a wind-down done over a period of time or a good bank/bad bank scenario put forward by Anglo," the spokesman said, adding that Brussels was expected to give its verdict at the end of the month. "It will only be at that stage that we'll know which of the options has been chosen."
Green Party chairman Senator Dan Boyle said at the weekend he expected a decision within three weeks. “It has to wind down in a way that is longer than the immediate term but shorter than 10 years," he said. "We should have a decision in two to three weeks.”
Fine Gael finance spokesman Michael Noonan said he did not think anything “concrete” would come out of the discussions today. “Both Anglo Irish Bank and the Department of Finance are keeping their cards close to their chest.” He said the decision should be taken as quickly as possible, with as “accurate a figure as possible to be given to the Irish taxpayer”.
Labour Party spokeswoman on finance Joan Burton said Mr Lenihan had been “far from frank, particularly with the Opposition, about what his proposals are”.
Ms Burton said the Government had been way behind the curve in relation to the strategy it had adopted towards Anglo Irish Bank. “I do hope that Brian Lenihan will go to Mr Almunia with a greater sense of realism about where Anglo has the country. I hope Mr Lenihan’s focus is on restoring the country’s reputation and trying to limit damage.”
Davy analyst Emer Lang wrote this morning in a note that clarification on Anglo was needed as soon as possible.
"Uncertainty over the fate, and particularly the cost, of Anglo continues to be a key driver of negative sentiment towards Ireland in financial markets," the note said. "Early clarification is needed, particularly as we are now a week into a key month for bank debt roll-overs, with reports suggesting that Bank of Ireland is set to kick off with a €1 billion debt issue as early as this week."
Chief economist at Bloxham Stockbrokers Alan McQuaid said pressure on the Government to wind down Anglo was building. "People are just getting brassed off and I think that in itself will force the hand of the politicians," he said.