Noonan has fresh plan for bondholders

THE Government will seek to impose significant losses on the senior bondholders in Anglo Irish Bank and Irish Nationwide, Finance Minister Michael Noonan has said.

Up to now, the Government has been prevented by the EU and ECB from burning senior bondholders in any of the financial institutions.

However, Mr Noonan said he now intends to bring a fresh plan to Europe to impose a “haircut” on around €3.5 billion in senior unsecured bondholders at Anglo and Nationwide.

But bondholders in the other banks guaranteed by the State — including Allied Irish Bank and Bank of Ireland — will be left untouched.

Mr Noonan was speaking in Washington DC yesterday morning on the third day of his four-day trip to the United States, having met with US Treasury Secretary Timothy Geithner and acting IMF chief John Lipsky in the capital on Tuesday afternoon.

The minister said he had indicated to “European colleagues and the [European Central Bank] that [they will] need to talk about the position in Anglo Irish Bank in the autumn”, having received support for the Government’s stance from the IMF.

An announcement will be made after his return to Ireland as regards Anglo’s US loan book, thought to be worth just over €10bn.

Around €3.5bn in senior unsecured, unguaranteed bonds issued by Anglo Irish Bank and Irish Nationwide Building Society could end up with losses imposed upon them, he said.

However, Mr Noonan was unwilling to specify a figure but did indicate that he was hoping to negotiate a substantial cut.

“[A haircut of senior bondholders] is not off the radar in terms of Anglo Irish Bank,” he said.

“You’ll recall that we have transferred all the deposits [of Anglo Irish Bank] out into the other banks and we have merged Irish Nationwide with Anglo Irish Bank but they don’t operate as banks anymore.

“No one holds accounts there anymore. They don’t have ATMs... They don’t take deposits. They’re really warehouses for impaired debt.

“We have signalled to our European colleagues and the ECB that we need to talk about the position in Anglo Irish Bank in the autumn.”

Mr Noonan rounds off his US visit in New York this morning, where he will speak at the Bloomsday festivities in Midtown’s Bryant Park, hoping to encourage future tourism to Ireland.