ECB ‘studies’ ways of cutting Anglo bill

THE European Central Bank is studying ways to reduce Ireland’s €3.1bn-a-year bill to pay off €30bn in promissory notes used to bail out Anglo Irish Bank, now the Irish Bank Resolution Corporation.

Yesterday ECB president Mario Draghi said there are “certain fragilities that need to be taken care of” with regard to Ireland.

The troika of the International Monetary Fund, the EU and ECB is nearing a consensus on how to deal with Ireland’s request to ease the debt burden.

“We didn’t discuss it yet, it is under study,” Mr Draghi said responding to a question on whether the ECB’s governing council had discussed the issue of the Irish promissory notes.

Mr Draghi’s reference to “certain fragilities” comes just days after the IMF’s deputy mission chief to Ireland, Craig Beaumont, speaking on resolving the promissory notes issue, said: “There is a lot of consensus. It is still a work in progress, but fundamentally the underlying process has attracted a lot of consensus.”

Mr Beaumont said an agreement by the IMF, EU and ECB on the promissory notes would “reinforce” Ireland’s debt sustainability.

However, while he thinks it “is reasonable at this stage” to expect plans for modest fundraising in 2012 will be achieved, he said there is a more substantial need for market funding in 2013 where the risks are on the “high side” and he would like to see these reduced by resolving the promissory notes issue.

And yesterday, the Professional Insurance Brokers Association (PIBA), the country’s largest group of independent mortgage and insurance brokers, slated the ECB for not reducing its main interest rate below its record low of 1%.

Director of PIBA Mortgage Services Rachel Doyle asked: “If the ECB is not going to act at a time when the eurozone may be hitting a double-dip recession point then when is it going to act?”

Ms Doyle said while Britain has maintained its interest rate fairly consistently at 0.5%, the ECB has fluctuated and not moved quickly enough.

“The combination of the conservative approach of the ECB in not moving more quickly to cut the rate further and the lack of will on the part of the Irish banks to lend are making for an exceptionally stilted domestic economy,” she added.

Meanwhile, Mr Draghi, speaking in Frankfurt yesterday, said he is confident the Irish public will pass a referendum on the European fiscal compact.