Bondholders seek to get written-off millions back

A number of bondholders seeking to have millions of euro restored to the value of their Irish bank bonds following the Assenagon ruling in the UK have begun contacting Finance Minister Michael Noonan.

A spokesperson for the Department of Finance confirmed Mr Noonan had been copied in on correspondence from a number of bondholders who hope to use the ruling to reverse the billion-euro haircut the Government imposed on bondholders.

“The minister has been copied on a small number of communications which have been sent by bondholders to the respective institutions,” said the spokesperson.

Irish banks face a potentially massive compensation bill after Justice Michael Briggs in the UK High Court ruled that the method the Government used to enforce burden-sharing measures was unlawful.

It is understood that most of the bondholders contacting Mr Noonan are targeting Bank of Ireland as they believe the bank has enough capital to pay the original face value of the bonds.

The original ruling was in relation to the liability management exercise carried out in late 2010, but the ruling has precedence and, as such, can be used in court where similar circumstances occurred, such as in cases involving bondholders in both AIB and Bank of Ireland.

The original case was taken by Assenagon Asset Management, a German investment vehicle which lost €17m when the value of its IBRC bonds were wiped out. Justice Briggs’ ruling means Assenagon is entitled to have the full value restored.

IBRC and the Department of Finance have moved to appeal the ruling, filing papers for a Supreme Court challenge in London.

A finance department spokesperson said: “The minister will continue to explore all avenues available to the State to ensure the maximum level of burden sharing with subordinated bondholders.”