€5bn saved under plan to renege on investor bank debts
Published 22/07/2011 | 05:00
FINANCE Minister Michael Noonan has claimed the Government's decision to renege on some debts owed to bank investors has so far saved the Irish taxpayer more than €5bn.
Mr Noonan also said he intended to push to be allowed not to repay another €3.5bn worth of loans due to Anglo Irish Bank and Irish Nationwide investors later this year but is likely to face fierce opposition from the European Central Bank.
"Our position on the Anglo and Irish Nationwide bondholders stands," Mr Noonan said.
"But it is not to be pursued today. That will be a different piece of negotiation."
But he stressed there was no question that investors owed money -- on a guaranteed or unguaranteed basis by either AIB or Bank of Ireland -- would suffer any losses.
Mr Noonan said he would be proceeding with plans for recapitalising AIB and Bank of Ireland at the end of this month, as well as Irish Life & Permanent, despite shareholders voting against accepting the cash injection that would result in the Government becoming the bank's majority owner.
Some €24bn has been earmarked for the banks to put them on a firm footing and allow them to start lending again.
But Mr Noonan said savings made so far meant this would fall to €21bn.
Another €3bn of the recapitalisation cost was built in as a contingency so this may also reduce the overall amount required.
The sale of bank assets will also cut the cost of the bank recapitalisation further.
Overall, the debt savings and the assets sales have yielded €12.1bn -- money Mr Noonan said would otherwise have had to be provided to the banks by the taxpayer.
Mr Noonan was speaking at the launch of the National Treasury Management Agency's (NTMA) annual report.
The head of the agency, John Corrigan, said he frontloaded the State's annual borrowing programme in 2010, raising €20bn at an average rate of interest of 4.7pc before Ireland was locked out of the bond markets.
This ensured the Exchequer had €16bn in cash at the end of last year.
As well as being responsible for managing the national debt, the NTMA also operates the National Pensions Reserve Fund (NPRF), the State Claims Agency, the National Development Agency and the National Asset Management Agency (NAMA).
Mr Corrigan said the NPRF made an 11.7pc return on its investments last year, slightly ahead of those achieved on average by other Irish pension funds.
The Government dipped into that fund to take €10bn from it to put money into AIB and Bank of Ireland which, by the end of last year, had lost 26pc of its value.