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March 27 (Bloomberg) -- Ireland wants to share bank losses with senior bondholders as part of a “final solution” for the country’s debt-laden financial system, Agriculture Minister Simon Coveney said.
Finance Minister Michael Noonan will seek agreement from European authorities to share losses with bond holders after stress-test results on March 31 determine how much extra capital the banks need, Coveney said. Government-guaranteed banks have 16.4 billion euros in senior unguaranteed unsecured bonds outstanding, Ireland’s central bank said on March 2.
Ireland’s government wants “a sustainable and comprehensive solution that involves recapitalization, but also an element of burden sharing as well as a funding package for Irish banks,” Coveneny told RTE in an interview today. “A lot of delicate and difficult discussions are going to take place over next two to three weeks, if not slightly longer.”
Coveney said that “markets are already ahead of us” in accepting that there is “a possibility if not a likelihood that bondholders may have to share some of the pain.”
The Irish government, which took power last month, is seeking to renegotiate the terms of last year’s bailout accord after European authorities opposed imposing losses on senior bond holders.
“The government’s aim is to minimize taxpayers’ exposure to debts that have been incurred in the past by private banks that are now predominately owned by the state and also ensure that we have a flow of funds” into banks, Coveney told the Dublin-based broadcaster.
Guarantee
Ireland’s lenders need an extra 20 billion euros ($28.2 billion) in capital, the Sunday Business Post said, without saying where it got the information. Ireland may have to inject 27.5 billion euros into the banks, according to a survey of 10 analysts and economists by Bloomberg News. The state has already injected about 46 billion euros into the financial system.
The government provided a guarantee in 2008 for six lenders including the country’s four so-called viable banks -- Bank of Ireland Plc, Allied Irish Banks Plc, Irish Life & Permanent Plc and EBS Building Society -- that are the focus of the present stress tests.
“There are many people in Europe who want Ireland to give a guarantee to all of its bank creditors including senior bondholders and everybody else,” Coveney said. “The reality is if that guarantee undermines the very creditworthiness of the Irish state, then our government can’t sign up that.”
Finance Minister Michael Noonan will seek agreement from European authorities to share losses with bond holders after stress-test results on March 31 determine how much extra capital the banks need, Coveney said. Government-guaranteed banks have 16.4 billion euros in senior unguaranteed unsecured bonds outstanding, Ireland’s central bank said on March 2.
Ireland’s government wants “a sustainable and comprehensive solution that involves recapitalization, but also an element of burden sharing as well as a funding package for Irish banks,” Coveneny told RTE in an interview today. “A lot of delicate and difficult discussions are going to take place over next two to three weeks, if not slightly longer.”
Coveney said that “markets are already ahead of us” in accepting that there is “a possibility if not a likelihood that bondholders may have to share some of the pain.”
The Irish government, which took power last month, is seeking to renegotiate the terms of last year’s bailout accord after European authorities opposed imposing losses on senior bond holders.
“The government’s aim is to minimize taxpayers’ exposure to debts that have been incurred in the past by private banks that are now predominately owned by the state and also ensure that we have a flow of funds” into banks, Coveney told the Dublin-based broadcaster.
Guarantee
Ireland’s lenders need an extra 20 billion euros ($28.2 billion) in capital, the Sunday Business Post said, without saying where it got the information. Ireland may have to inject 27.5 billion euros into the banks, according to a survey of 10 analysts and economists by Bloomberg News. The state has already injected about 46 billion euros into the financial system.
The government provided a guarantee in 2008 for six lenders including the country’s four so-called viable banks -- Bank of Ireland Plc, Allied Irish Banks Plc, Irish Life & Permanent Plc and EBS Building Society -- that are the focus of the present stress tests.
“There are many people in Europe who want Ireland to give a guarantee to all of its bank creditors including senior bondholders and everybody else,” Coveney said. “The reality is if that guarantee undermines the very creditworthiness of the Irish state, then our government can’t sign up that.”
