Ir­ish banks re­paid bond­hold­ers €70 bil­lion

The Pak Banker - - Company& -

DUBLIN: Ir­ish banks re­paid €68.8 bil­lion to se­nior bond­hold­ers and €1.4 bil­lion to sub­or­di­nated bond­hold­ers as their full debt fell due un­der the two-year blan­ket guar­an­tee which ended in Septem­ber, Min­is­ter for Fi­nance Brian Leni­han has said.

This meant that no bond­holder had to share in the €60 bil­lion re­cap­i­tal­i­sa­tion costs of the do­mes­tic banks.

"As is nor­mal prac­tice when bonds ma­ture, they are re­paid - in this in­stance all were se­nior bonds and all were Govern­ment guar­an­teed. Fur­ther­more, un­der Ir­ish law se­nior debt obli­ga­tions rank equally with de­posits and other cred­i­tors," said Mr Leni­han.

In re­ply to a par­lia­men­tary ques­tion from Labour fi­nance spokes­woman Joan Bur­ton, Mr Leni­han said that €124 bil­lion of se­nior un­se­cured bank debt was cov­ered un­der the guar­an­tee. A fur­ther €12 bil­lion of dated sub­or­di­nated debt was also guar­an­teed on Septem­ber 30th, 2008.

Mr Leni­han said that €25 bil­lion of se­nior bank debt was is­sued un­der the ex­tended El­i­gi­ble Li­a­bil­i­ties Guar­an­tee, which cov­ers bonds of up to five years but does not cover sub­or­di­nated debt.

Mr Leni­han said that talk of a pos­si­ble de­fault on se­nior debt at the Ir­ish banks had done "huge dam­age" to the coun­try.

"A small coun­try like Ire­land can­not de­fault with­out the sup­port of a cen­tral bank be­cause you have to have the bank loaded with cash while you're en­gaged in such a de­fault and it's not fea­si­ble for us to do this," said the Min­is­ter.

"We re­ally need to face up to this be­cause we've al­lowed the pub­lic dis­cus­sion to be­come dom­i­nated by it. Peo­ple shouldn't be sur­prised if there's an ero­sion of trust in the Ir­ish bank­ing sys­tem." -PB News

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