Troika’s bondholder burning warning

The troika shot down any prospect of Ireland burning the bondholders in late-2010 and warned such a move would cancel any possibility of a future bailout, a senior Government adviser during the crisis has confirmed.

Alan Ahearne, who was a senior advisor for the late finance minister Brian Lenihan between 2009 and 2011, outlined the situation at a bank inquiry meeting in which he also claimed the €35bn cost of the Anglo Irish and Irish Nationwide crises was low.

Speaking before ex-IMF officials Ajai Chopra, Marco Buti and current Finance Minister Michael Noonan attend the final day of public hearings of the cross-party body today, Mr Ahearne said as the original bank guarantee ended in September 2010, Mr Lenihan was “open” to burning junior bondholders.

However, he said while some members of the IMF were not opposed to the potential measure to help ease Ireland’s financial dilemma, the ECB was “quite strident” that if it happened no bailout programme would take place — meaning, he said, Ireland would have “run out cash in 2011”.

Mr Ahearne also said he initially discussed “a very basic ladybird book version” of a bailout with “an ex-IMF official” in 2009, at least 12 months before it occurred.

Mr Ahearne also said the ultimate €35bn cost of the Anglo and Irish Nationwide crises was low as most of the money will be retrieved.

Earlier, two senior PricewaterhouseCoopers crash-era auditors who, according to ex-taoiseach Brian Cowen were “hopelessly optimistic” about the banks, defended the fact their worst case scenario said the sector would lose €10.6bn, not the €64bn which happened.

Denis O’Connor and Aidan Walsh said PwC was paid €2.4m for the “Atlas” research, but that it did not include checks on whether people could repay them — an issue inquiry members have repeatedly criticised auditors for ignoring.

The auditors said when the crash happened 22 people owed €25.5bn— almost half of the overall cost of the crisis — including businessman Sean Quinn and developer Michael O’Flynn.


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