Elderfield against imposing losses on senior Anglo bondholders

The Financial Regulator is urging the Government not to consider imposing losses on Anglo Irish Bank senior bondholders.

Last week, the Finance Minister Brian Lenihan said senior bondholders with the highest ranking debt in Anglo will suffer no losses.

Matthew Elderfield says it would be possible to impose losses using resolution powers - but he's warning against such a move.

"The current difficult funding position for both the Irish government and the banking system means one should be very cautious about contemplating such a step in the present crisis, never mind whatever legal and constitutional obstacles would need to be resolved," Mr Elderfield said.

The Regulator made the comments at the Oireachtas Joint Committee on Economic Regulatory Affairs this morning, also providing assurances that his office would in the future deliver "a more assertive, risk-based and challenging approach to banking supervision."

"We will make life difficult and expensive for banks which fail to manage risk adequately," Mr Elderfield said.

"While the Irish banking system deteriorated rapidly, it will only be rebuilt slowly," he added.

"At the Central Bank, we are under no illusion about the work that still remains to be done.

"We are by no means near the end of this process, but we are coming to the end of the critical recapitalisation phase."