Cuts sought on Anglo recapitalisation

Minister for Finance Michael Noonan has indicated that the Government will not impose losses on Anglo Irish Bank's senior unsecured unguaranteed bondholders.

"Ireland has been doing so well that it would be imprudent to risk all the ground we have gained and all the credibility we have achieved, particularly on the markets, for the sake of a relatively small amount of money, which actually isn't a charge on the Irish taxpayer anyway; it's coming through the liquidity flow from the central bank into Anglo Irish," he said.

However, he said the Government may seek a restructuring of the promissory notes used to recapitalise the bank, which could result in savings of billions of euros.

Speaking in Washington, where he has been attending a meeting of the International Monetary Fund (IMF), the Minister for Finance said the next stage of renegotiation would focus on bringing the overall debt burden down, which could include "a different arrangement" for the promissory notes in Anglo.

He said imposing losses on bondholders had been tried in Greece, but the immediate effect of private sector involvement in reducing the Greek debt was to transfer the pressure onto Italy and Spain.

"Certainly the European authorities at this stage are terrified at this juncture of any action that could be taken as a credit event that would kick on to other European countries."