Minister for Finance Michael Noonan has said he is “deeply concerned” Ireland could be engulfed by the latest Greek debt crisis.
As political and financial turmoil in Greece sent shock waves through international markets, Mr Noonan attempted to draw a distinction between Ireland’s financial difficulties and those been played out in Athens.
"People are nervous. Ireland isn't Greece, we're structured differently. Our fear here is that there would be some knock-on effect which will impact adversely on Ireland," he said in an interview on Bloomberg Television's In Business programme.
Mr Noonan, who is in New York on a trade mission, also sought to quell market unease over his surprise announcement yesterday that the Government would seek to impose “substantial losses” on senior Anglo Irish Bank and Irish Nationwide bondholders.
There was "no urgency" to the plan and his comments had been given too much weight because of the crisis in Greece, he said.
“Ireland won't act unilaterally on Anglo Irish and Irish Nationwide,” Mr Noonan said.
The Government, which has injected a combined €34.7 billion into Anglo and Irish Nationwide over the past two years, is winding down the lenders over a 10-year period. Mr Noonan said the "last red cent" of debt owed by the government and the "pillar banks" will be repaid.
Irish bonds fell today despite the Minister's comments, pushing 10-year yields up one basis point to 11.56 per cent. The extra yield investors demand to hold Irish 10-year debt rather than German securities widened as much as 12 basis points to 8.72 per cent today, a euro-era record.
Tánaiste Eamon Gilmore told the Dáil this morning that Mr Noonan had been reiterating Government policy on burden-sharing for senior bondholders in his comments yesterday.
“The Minister expressed the Government position on which we have been absolutely consistent which is that the burden on the Irish taxpayer for the losses that have been incurred by the banks must be minimised,” Mr Gilmore said.
"He has made it clear that that’s a matter that will be discussed with the European Central Bank in particular and with the European Commission. The issue of legislation required to implement will obviously follow those discussions.”
Earlier, Mr Gilmore said Ireland was in a "much better position" to impose substantial losses on senior bondholders at the two banks than it was a year ago. He also said the Government had not informed the ECB of its plans ahead of Mr Noonan's statement but insisted that circumstances had changed since the bank opposed such a move when Ireland's EU-IMF bailout was agreed last year.
"I don't think it'd come as any great surprise" to the ECB that Ireland is seeking to share the burden of bailing out both lenders, Mr Gilmore told RTÉ's Morning Ireland. He said the Government plans to discuss senior bond loss-sharing with the ECB.
Fianna Fáil leader Micheal Martin this morning said the ECB has been "trenchantly opposed" to burden-sharing with senior bank bondholders. "It remains to be seen if the ECB will go along with this," he said.
The European Commission said it had not received any proposal from Ireland. However, a spokesman said last night it would examine any proposal by the Government on the restructuring of the banks with the ECB and IMF. There was no comment from the central bank, which opposed burden-sharing with senior bondholders at the Irish banks in the bailout talks last year.
Additional reporting Bloomberg
