Deal could free banks from loss-making mortgages

A re-negotiation of the promissory notes, or IOUs, on bank debt is under way and any deal could also see banks freed from some loss-making mortgages, the finance minister has said.

Amid reports that Ireland may be allowed to suspend the annual €3.1bn payments on Anglo Irish Bank debt, Michael Noonan said the Government was attempting to restructure the repayment timetable.

But any deal to delay or spread the estimated total €30bn in debt payments looks some way off, ministers indicated yesterday.

Mr Noonan last night told RTÉ’s The Week in Politics: “The European authorities, in line with our talks on the promissory note, have opened a discussion on how best, if we get this deal, the Irish banking system and State will benefit. And they see other benefits apart from the sustainability of the debt.”

Asked if any movement of tracker mortgages was part of the deal being discussed, he said: “Having a final restructuring of some of the elements of the bank would give us a much stronger banking system. But as well as that it would give you banks that would have value, and, further down the line it would be possible to sell the State’s share-holdings in those banks at considerable amounts of money, which would reduce the debt in turn. So that is there in the mix as well, but nothing is agreed.”

It is understood the EU/ECB/IMF troika is close to concluding a paper on the overhaul of the Anglo IOU debt, which will include options to cut out bad mortgage debt from the banking system.

It is believed loss-making tracker mortgage loans from the rest of the domestic banking system could be transferred into Anglo, now known as the Irish Bank Resolution Corporation.

The structure could see the IBRC take on tracker mortgages from AIB, Irish Permanent and possibly Bank of Ireland.

On the general Anglo debt, Mr Noonan said: “We are at the point now where an Irish ask is being converted into a European and IMF policy paper and when we get it as an agreed paper between ourselves and the Troika authorities, then we’ll have to get political support behind it.

“So it is a project where if we’re successful it will be in the medium term rather than immediately.”

Tanaiste Eamon Gilmore yesterday also said there was no deadline to conclude any deal on the Anglo debt.


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