Winding up Anglo now could cost €70bn, says Taoiseach

 

The cost of immediately winding up Anglo Irish Bank could be more than €70 billion and would not be interest of the taxpayer, Taoiseach Brian Cowen has said.

Speaking in Co Offaly, Mr Cowen said the Government was anxious to bring the matter “to finality” as soon as discussions with the European Union were completed.

“But the idea that it would be wound up with us having to come up with up-front costs of winding up that bank to the tune of €70 or further billions clearly would not be in the interests of the taxpayer,” he said.

“The issue that is determining the Government’s policy is how to minimise the exposure to the taxpayer, which is already considerable."

Mr Cowen again dismissed suggestions the Coalition was divided on how to deal with bank, saying the Government was “at one in relation to all this”.

He said discussions with the European Commission were at an advanced stage. Minister for Finance Brian Lenihan is due to attend a meeting with finance ministers in Brussels early next week.

Mr Lenihan will be reporting to the Government on the issue when he returns, Mr Cowen said.

European Central Bank chief Jean-Claude Trichet said yesterday the Irish Government alone was responsible for dealing with the mounting costs of supporting Anglo Irish Bank.

As the Coalition faces into a difficult budget estimates process against the backdrop of worsening economic data, Mr Trichet also said Ministers should continue to make “appropriate” moves to stabilise the economy.

He declined to discuss escalating concern that the rising cost of the Anglo bailout, which stands at €25 billion, was creating an intolerable burden on taxpayers and undermining market confidence in the Government’s overall economic plan.

The European Commission is examining a new restructuring plan for Anglo, scrutiny which coincides with a credit rating downgrade on Irish debt by Standard Poor’s and a rise in the State’s borrowing costs.

“If I’m not mistaken it is a bank which is owned by the Government . . . so it’s a responsibility of the Government of Ireland and of the Irish authorities in general to take the appropriate decisions,” Mr Trichet told reporters. “I would say that it is the responsibility of the Irish Government and of the Irish authorities in general to deal with their banks. That is a responsibility that lies very much in Dublin.

“I have confidence that they will manage this difficult issue as well as possible as they did in the past.”

Mr Trichet was speaking as the bank’s governing council extended emergency liquidity measures for banks into 2011 and held its main interest rate at a record low of 1 per cent for the 17th consecutive month.

He offered no comment on an assertion by Irish Central Bank governor Patrick Honohan that Irish borrowing costs were “ridiculous” and declined to say whether he agreed with the assessment from the National Treasury Management Agency that the SP downgrade stemmed from a “flawed” analysis.

It was his practice, he said, not to comment on market movements.

“As regards the overall Irish strategy, I would encourage Ireland to continue to take the appropriate decisions that they took at the very beginning of the crisis with the frontloading decisions that are very important in all domains and of course including in the fiscal domain which remains very important.”

The ECB president’s comments came as the latest exchequer figures showed the Government’s tax revenues continue to fall. The State has collected €18.9 billion in taxes in the first eight months of the year, which compares to €20.8 billion in the same period last year, a drop of 9 per cent. The Department of Finance said the decline had been anticipated in the monthly target for August.

Mr Trichet said a double-dip recession in Europe was not “in the cards” but said risks to the inflation outlook were on the upside. The recovery would continue “at a moderate pace with uncertainty still prevailing”.