Promissory notes deal expected

The Department of Finance expects to announce a deal on the re-negotiation of the €27 billion “Anglo” promissory notes during the troika’s visit to Ireland next week, despite a senior European Central Bank official claiming that he knows nothing about it.

A spokesperson for the Department of Finance said: “The concrete proposal is the paper on promissory notes that the troika with input from ourselves are working on. It is expected that the paper will emerge during the troika’s visit next week.”

The spokesperson added, “If the IMF, the EU Commission and the ECB form part of a proposal we would expect it will be accepted.”

However, speaking to RTÉ yesterday morning, ECB executive board member Jorge Asmussen said that, as far as the ECB is concerned, Ireland should stick to its bailout plan and repay all of its debts in full.

“I’m not aware of any concrete proposal how to stretch the maturity,” he said.

Mr Asmussen told the Institute of International and European Affairs in Dublin that the costs of the promissory notes has been factored into the troika programme.

“When the programme for Ireland was designed, the costs of the banking sector measures already in place, including the promissory notes, were fully factored in. The annual cash repayments of promissory notes is thus financed by programme resources. That programme is on track. Any deviation from that programme should be considered very carefully indeed. The perceptions that have built-up around Ireland’s successes in the programme should not be jeopardised. It has been hard-won and it is worth fighting for. Therefore, the ECB remains of the opinion that Ireland should honour its commitments stemming from the promissory notes, as foreseen. This in our view is the best way to regain sustainable market access.”

Mr Asmussem said that considerable structural and financial reforms are still needed in Ireland to quash any lingering doubts about the country’s debt sustainability.

“Substantial challenges remain. Ambitious structural and financial reforms are still needed . . . The Irish government has the capacity to further consolidate and implement the necessary reforms, so that there will be no lingering doubts about the sustainability of government debt,” he said.

Mr Asmussen was more positive on the possibility of allowing Irish banks to move loss making tracker mortgages off of the banks’ balance sheets. Tracker mortgages make up more than 50% of the banks’ residential property loans and, although performing, they are not earning due to a mismatch between high funding costs and the low ECB rate.

Mr Asmussen said that there was no plan in place but that the ECB considered the tracker mortgages to be key to returning banks to profitability.