THE European Central Bank had not been forewarned about comments by Minister for Finance Michael Noonan about “burning” bondholders or lenders in Anglo Irish Bank and Irish Nationwide because it was Government policy, Taoiseach Enda Kenny said.
He also said the reduction in Ireland’s international loan interest rates was not discussed at the weekend meeting of EU finance ministers because of the “overriding imperative” to deal with the Greek crisis.
The issue was raised by Independent TD Shane Ross, who said it was the “first time since the Government came to power that it has put the interests of the taxpayer in front of the bondholders and the banks and this should be applauded”.
In Washington last week Mr Noonan had said that the Government would move to impose discounts or haircuts on lenders to the two financial institutions, because they were no longer banks taking deposits or giving loans. There is about €3.1 billion in bonds with Anglo Irish Bank and approximately €600 million with Irish Nationwide.
Mr Ross asked if the ECB had been told in advance about Mr Noonan’s remarks. He said “it is important to know and it would be a welcome departure and re-emphasis of Government policy in that we are moving to stand up to the ECB, to stand up to Sarkozy and to have our own independent policy on the bondholders and Europe”. He said the move was to be welcomed if the ECB was realising “that it must take note of the attitudes of the peripheral countries”.
Mr Kenny said: “The ECB were not aware of his comments. They were not forewarned of his comments because his comment was consistent with what has been the position of Government.” He said the “bondholders in Anglo Irish Bank are in different circumstances to those in Allied Irish Banks and Bank of Ireland”.
Mr Ross asked, however, if this was “part of a new departure or is it something old? What will happen if the ECB says no? Will we unilaterally burn the bondholders?”
Mr Kenny would not be drawn about whether Ireland would act on its own on this issue.
