Anglo bailout of €25bn 'manageable'

THE €25 billion or more costs of bailing out Anglo Irish Bank are “manageable” and will not bankrupt the State, Minister for Finance Brian Lenihan has contended.

Mr Lenihan accepted, however, the Government must chart a clear course for Anglo to “derisk” it for the taxpayer and to allay international concerns about the bank sinking the economy.

He said the best option for Anglo was reducing its debt and its risk over an extensive period. Mr Lenihan would not disclose if the Government, as has been reported, now favours a wind-down over a long period over the good bank/bad bank solution proposed by Anglo’s management.

Speaking before his departure for Brussels where he met EU competition commissioner Joaquín Almunia to discuss the bank’s future, Mr Lenihan also disclosed the date for this year’s budget – Tuesday, December 7th.

Mr Lenihan told RTÉ the Government had had to live with the danger posed by Anglo since September 2008 and had to “navigate some very difficult waters”.

“International conditions have become much more fragile since May of the year. There’s a general uneasiness in European markets. We have to hold our nerve,” he said. “We need to set out a clear course for the bank and how it will be derisked for the Irish State and the Irish taxpayer.”

The Minister said the alternative of letting the bank fail was “unthinkable”, and asserted there could be no default on debt. He said the economic situation in Iceland had continued to decline since it defaulted, while “we are seeing stabilisation here in Ireland”.

He also said Latin American companies that defaulted had been left in “deepfreeze” for many years.

Taoiseach Brian Cowen would also not disclose the Government’s position ahead of Mr Lenihan’s meeting with Mr Almunia.

Speaking in Tullamore, Mr Cowen would say only he sought a solution that “was in the best interests of the taxpayers” and that all options were being looked at.

Fine Gael’s deputy finance spokesman Kieran O’Donnell said the Government’s conversion to a wind-down solution was a monumental U-turn. He said Fine Gael had called for an orderly wind-down of Anglo two years ago, but the Government had been determined to keep the bank alive.

“We are now in a situation where it will cost €25 billion or upwards. People know it was wrong. The Taoiseach and Minister call it an evolution. But it is really a monumental U-turn,” said Mr O’Donnell.

Labour’s finance spokeswoman Joan Burton said Fianna Fáil had prioritised saving Anglo over creating jobs in the economy.

“If the Government knowingly guaranteed the debts of bankrupt banks, as now seems to have been the case, they will have jeopardised Ireland’s economic sovereignty to save a niche developers’ bank of little systemic importance to the economy as a whole.

“The Labour Party stood alone in the Dáil in opposing the blanket bank guarantee, and subsequent events have since vindicated this position,” she said.