07/09/2010 18:18 >>
*DJ Irish Fin Min: Open To Restructuring Anglo Irish Debt
07-09-10 1618GMT Copyright (c) 2010 Dow Jones & Company, Inc.
UPDATE: Irish Fin Min: Open To Restructuring Anglo Irish Debt
(Adds detail)
BRUSSELS -(Dow Jones)- Irish Finance Minister Brian Lenihan Tuesday declined to rule out a further restructuring of Anglo Irish Bank's debt after a government guarantee scheme ends later this month.
The government's bill for bailing out Ireland's banks has already hit EUR33 billion euros, or roughly 20% of Ireland's gross domestic product. Concerns about the cost of fixing the banks has weighed on Irish government bond prices in recent weeks, pushing its cost of borrowing higher.
The government is proposing to restructure state-owned Anglo Irish, the most troubled of the banks, either splitting it into "good" and "bad" pieces or winding it down over the next 15 to 20 years.
Under the program that ends this month, the government has guaranteed EUR87 billion of bonds issued by banks.
In a press conference, Lenihan was asked whether the government intends to restructure bonds issued by Anglo Irish in order to lessen the cost of repaying that debt.
"That element of the guarantee will end of course on the 30th of September and again at that stage it's open to the government to review where we go," Lenihan said. "Already there have been debt management exercises in relation to part of that subordinated debt."
In July 2009, Anglo Irish bought back some of its bonds at a steep discount to their face value.
"The bank already engaged in debt liability exercise on subordinated debt that led to a substantial reduction in the value of the debt," Lenihan said.
Lenihan said that it will take time to deal with Anglo Irish Bank.
"Clearly the workout of banking assets always takes time," he said. "You can't have a fire sale of banking assets. Certainly the workout element of any strategic plan will take place over time, where Anglo is concerned."
Lenihan said his government had been "very aggressive" in tackling the nations bank problems, and insisted it would not need outside help to deal with Anglo Irish.
In particular, he said the government won't seek financial help from the European Financial Stability Facility, which was set up by the euro zone to help governments that are having difficulty borrowing in the bond markets.
"I don't anticipate that at all," Lenihan said. "What we anticipate doing is continuing to go to the markets, which remain open for Ireland, and borrow in the ordinary way."
-By Matthew Dalton, Dow Jones Newswires;
matthew.dalton@dowjones.com; +32 (0)2 741 1487
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