Guarantee of riskier bonds limits ability to cut bailout bill

THE decision to guarantee riskier bank debts was not necessary and restricted the ability to reduce the state’s bailout bill, according to the Governor of the Central Bank Professor Patrick Honohan.

He said the scope of the blanket guarantee of the banks was “exceptionally broad” in that it covered deposits, senior debt and riskier, subordinated debt.

Mr Honohan said the arguments the Government has put forward for the inclusion of this subordinated debt in the guarantee were open to question.