Cabinet attacked for failing to give certainty to markets

THE Government’s plan to reincarnate Anglo Irish Bank as two separate entities, neither of which will act like a normal bank, has been attacked for failing to give any of the certainty international markets have demanded.

Fine Gael’s finance spokesman, Michael Noonan, said the creation of one deposit bank, and another vehicle for all the nationalised institutions’ loans, brought no clarity on how much of a hit taxpayers will have to take.

He said Finance Minister Brian Lenihan should have made it his mission to spell out every detail of the next phase of the Government’s banking strategy, but this did not happen.

“I would have thought his priority would have been to give certainty to the markets. And there are so many questions you can ask about this, it makes it more uncertain than ever,” he said.

Mr Noonan said the plan was a “fudge” because the Government and Anglo’s plans were tuned down by the European Commission.

“The proposal of the Irish authorities has been turned down in Brussels. They had two choices last week, they could go for this good bank-bad bank option, which was what their proposal was.

“Or they could go for a wind-down over a period of time... extraordinarily, they have come up with a third choice.

“[But] there is no relief for the taxpayer in this statement,” he said.

Labour Party finance spokeswoman Joan Burton expressed similar dismay at the explanation statement from the Department of Finance.

She said it did nothing to improve her understanding of how the remains of Anglo would function in the long term and what the cost would be.

The Government said it will not realise its freshly calculated bill until the Financial Regulator sets new capitalisation rules in October.

Ms Burton said this only served to prolong the confusion: “It fails to draw a line under Anglo’s mounting losses and does not do enough to dispel the uncertainty hanging over Ireland’s public finances.

“The minister has ‘kicked the can’ until October, when the Central Bank will rule on the level of capital both new entities will require, and how much taxpayers’ money will be required.”

Mr Noonan said he assumed the delay was forced because the Government had to sort out the bank guarantee first. This runs out at the end of September.

But this wait offered no relief to investors. “In terms of giving comfort to the markets, I don’t think it will,” Mr Noonan said.


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