CENTRAL BANK:CENTRAL BANK governor Prof Patrick Honohan said additional funding for Anglo Irish Bank and Irish Nationwide was "essentially lost money".
He also expressed regret that the Central Bank had not taken a more pessimistic view of how much the bank bailout would cost the taxpayer.
Speaking on RTÉ radio at lunchtime yesterday, Prof Honohan admitted that the extra funding for Anglo and Irish Nationwide was “essentially lost money”, but said the investment into AIB “should yield returns over time”.
He said the announcement “gave as much certainty as could be reasonably expected” at this time.
Admitting that the sums invested in propping up Anglo in particular were “colossal”, the governor said the bailout of the banks could be managed without needing to seek emergency financial aid from the EU and the International Monetary Fund.
“It is not painless by any means. It is going to be a severe pain, as will the adjustment of the overall fiscal deficit which emerged on normal tax and receipts as part of the boom that we got caught up in,” he said.
“I think by the time we’re through this in 2014, the banking contribution to our debt will be about a third of the increase,” Prof Honohan added.
The governor rejected suggestions that Nama had paid too much for the first two tranches of loans transferred to the agency.
He also denied claims that the Central Bank had been involved in a cover-up over the total cost of the bailout.
Prof Honohan said the policies now being pursued by the Government were correct, adding that he was sorry the Central Bank had not been more pessimistic in estimating the total cost of the bank bailout.
