Reuters) - Ireland's main opposition party warned on Friday that it may unilaterally restructure bank debt not covered by a state guarantee if it takes power this month, unless the burden on the country from an EU/IMF bailout is eased.
Fine Gael, favorites to lead the next coalition government after a Feb 25 poll, wants Europe to reduce the interest rate it is charging Dublin on its part of an 85 billion euros assistance package put together to deal with a mounting financial crisis.
Outlining the party's banking strategy, finance spokesman Michael Noonan said there was an opportunity for Ireland to negotiate a fairer bailout as part of European efforts to bolster its defenses against a year-long debt crisis.
"If the burden of the debt on Ireland is not reduced ... then the position in Ireland going forward gets very sticky, and we are simply pointing that out in a totally unthreatening way to our European colleagues," Noonan, a likely future finance minister, told reporters.
But the center-right party took a harder line in its policy document on banking, warning that if some of its proposals were not available then it could unilaterally impose losses on unguaranteed senior bonds, estimated at around 15 billion euros.
"Should some credible combination of these options prove not to be available from Europe, the next Irish government would -- in order to restore its own credit worthiness -- be left with little choice but to unilaterally restructure some of the private debts of those Irish banks in greatest need of recapitalization," the party said.
As part of its banking plan, Fine Gael wants to be allowed to impose losses on senior bondholders in state-run lenders Anglo Irish Bank and Irish Nationwide, which it said are not systemically important.
Fine Gael's proposals focus on debt not covered by an Irish government guarantee but the European Central Bank is opposed to such a move for fear of contagion risk.
Noonan also wants European support to recapitalize the country's banks and is looking for Europe to potentially take equity or long-term debt investments in its two main lenders, Allied Irish Banks and Bank of Ireland.
Fine Gael also wants to avoid a fire-sale of some Irish banking assets, which have to be sold as part of the EU/IMF deal, and is looking instead to transfer some of these assets to a special purpose vehicle, possibly funded by the EU buying long-term bonds.
To wean Irish banks off their dependence on ECB funding, Fine Gael is also looking at possibly securing funding from the U.S. Federal Reserve using the dollar assets of Irish banks, estimated at around $50 billion, as security.
Noonan wants to sell Allied Irish Banks, which has been effectively nationalized, to a large foreign bank.
He said that a private equity consortium led by Dublin's Cardinal Asset Management appeared to be the preferred bidder for building society EBS.
(Reporting by Carmel Crimmins; Editing by Jon Loades-Carter)
IrelandRegulatory News |
Thread abonnieren
