Promissory note concession won in Cyprus

The key moment in Ireland's promissory note deal was in Cyprus a year ago when Minister for Finance Michael Noonan won over Jörg Asmussen with the offer to liquidate Irish Bank Resolution Corporation, according to an interview.

Mr Noonan told Bloomberg Businessweek that he pulled aside Mr Asmussen in Cyprus in September last year, helped by German finance minister Wolfgang Schäuble. Mr Asmussen had been seen as a hardliner on the promissory notes, having repeatedly called on Ireland to meet its obligations in full. Mr Noonan said the meeting had already lasted several hours when he asked Mr Asmussen if it would make a difference if IBRC were to lose its banking licence.

“And [Asmussen] says, ‘Yeah, that would make a huge difference, because we’re no longer dealing with a bank’,” said Mr Noonan, according to Businessweek.

The concession made the IBRC deal tolerable because it meant it could not be held up as a precedent for banks in other countries, with the eventual agreement announced in February this year.

The Cyprus intervention came after Mr Noonan had sought support for debt relief by mounting a “roadshow” that had taken him to Rome, Paris and Berlin. Mr Schäuble had been receptive, and had said: “I’ll meet you in Cyprus and we’ll talk to a couple of people.”

Mr Noonan had previously won over "Christine" [Lagard)]at the IMF, and was optimistic about gaining the backing of ECB chief Mario Draghi.

Mr Noonan said he was now working on a similar approach to winning support for the ESM retroactively recapitalising Irish banks. “All I need at the moment is serious people to agree in principle.”