Ministers reject talk of U-turn on election promises
POLITICAL REACTION:MINISTER FOR Finance Michael Noonan has rejected claims that the Government parties had reneged on promises made during the general election on imposing burden-sharing on senior bondholders of loss-making banks.
In a series of interviews in the wake of Thursday’s major recapitalisation announcement, Mr Noonan and other Government Ministers denied any U-turn on the issue of sharing losses with senior holders of Irish bank debt.
“We have not broken our word,” Mr Noonan said, arguing that all election promises were predicated on agreement being reached at European level.
He said that since the banking crises had emerged Fine Gael had been in favour of burden-sharing and said that it has already happened with subordinated debt.
“We want burden-sharing but we would not do it unilaterally. We would only do it with the agreement of Frankfurt and we did not get it,” he told RTÉ.
“The ECB in Frankfurt has held out solidly that senior bondholders will not be touched. It’s a majority view in Frankfurt. There are governors in Frankfurt who do not hold that view.”
He said the ECB had been “very good to Ireland”, providing almost €200 billion in liquidity. He also added that the Government was reserving its position in relation to Anglo Irish Bank.
He said if Anglo told the Government there was a need for more capital the Government would enter discussions with the ECB on burden-sharing in respect to senior bonds in that institution. But he agreed the Government would not be pushing for renegotiation on senior debt in either AIB or Bank of Ireland.
“The debate is over. Frankfurt would not agree,” he said.
Minister for Public Expenditure and Reform Brendan Howlin also dismissed the suggestion that the announcement represented a U-turn for Labour.
He said the Coalition had chosen the best way out of a “ruinous situation”. He said that the advantages of burning bondholders would have been outweighed by disadvantages.
Minister for Transport Leo Varadkar denied that the announcement contradicted a statement he made in February that “not another cent” would go to the banks unless junior and senior bondholders shared the losses.
He said there was an element of burden-sharing, because about €5 billion of the €24 billion came from losses imposed on junior subordinated bondholders.
“We would have liked to impose losses on senior bondholders but Europe has ruled it out. We are certainly ruling it out for AIB and Bank of Ireland, because Ireland will never get back to normal if we do impose losses on senior bondholders at these two institutions,” he said.
Minister for Social Protection Joan Burton said it was premature to say the Government had caved in on the issue.
“I have always said that negotiation is a marathon not a sprint. It will take a period of time.
“It is something that always needed to happen at a European level,” said Ms Burton, who added that she still strongly favoured burden-sharing.
Her Labour ministerial colleague Ruairí Quinn said the Government had no choice in the matter.
“The country is in receivership. We have no room for manoeuvre. Michael Noonan has less room for manoeuvre than Michael Collins had as the first minister for finance of the Irish Free State.”
He denied it was a reversal of policy, saying the decision taken was a “new way”.
Sinn Féin leader Gerry Adams said the policies of the last government were being continued.
“The Government is continuing to pursue Fianna Fáil’s failed policies on the banks and they are now acting as little more than agents for the IMF in Ireland,” he said.
Fianna Fáil finance spokesman Brian Lenihan has also said Thursday’s announcement confirmed the Government remained fully and unwaveringly committed to the EU-IMF deal.