A VOLUNTARY burden-sharing deal with senior creditors in Irish banks would raise no more than €2 billion for the Irish banking system but would “pose the least risk”, according to analysts at Fitch Ratings.

The credit ratings agency said the implications of a coercive burden-sharing arrangement for the banks’ senior unsecured unguaranteed creditors would be “very significant” and “potential savings may not justify the risks”.

However, its analysts acknowledged that Fitch was “not in a position to assess all of the potential practical and economic consequences” of a burden-sharing arrangement that was imposed rather than agreed with creditors.

Fitch stressed that it “continues to believe the risks of the sovereign and the domestic banks are tightly interlinked”.

Discussing the likely means by which the next Irish government could pursue a policy of burden-sharing on the senior creditors of Irish banks, Fitch said a voluntary tender offer posed “the least risk in terms of unintended legal or economic consequences”.

Under such an offer, the banks would offer to return creditors a percentage of their investment, but not the full amount.

“If implemented against a background of extreme uncertainty, it could result in a reasonably good uptake for Anglo and Irish Nationwide Building Society in particular,” Fitch noted.

Fitch estimated that a voluntary tender offer for Anglo Irish Bank and INBS would be unlikely to generate more than €1 billion.

“Given that both the haircuts and the uptake are likely to be less significant in the case of systemically important banks, this approach would be likely to generate less than €2 billion for the system as a whole.

“Although valuable, these amounts would still be dwarfed by the recapitalisation costs already undertaken.”