Lenihan insists there is a limit to toxic bank bailout
Published 03/09/2010 | 05:00
Finance Minister Brian Lenihan last night insisted there is a limit to how much the Government will pour into Anglo Irish Bank.
Bank bosses claim the bailout will cost taxpayers €25bn but credit-rating agency Standard and Poor's (S&P) have put the figure at €35bn.
The minister has refused to say how much the bank is likely to cost the taxpayer but has previously claimed the €35bn figure is not accurate.
Last night, he said: "Of course, there has to be a limit. It's not a question of keeping it afloat. It's a question of keeping the whole financial reputation of the country afloat," he said.
"Billions will have to be poured into this institution over a long number of years on a cash-flow basis. Not this week or next week because, unfortunately, this bank loaned far too much, created huge exposure, and these exposures threatened the very financial stability of the country. Any response from the Government has to deal with that."
The minister's comments came on the day the Financial Times warned that nationalised Anglo Irish Bank is "still the rotting corpse in the disaster zone of Irish banking".
The newspaper also claimed investors are turning sceptical again about Ireland's prospects of an economic turnaround. The influential Lex column claimed Anglo Irish continues to make "ludicrous losses".
It comes days after The New York Times queried if Anglo could "bring down a country".
It is understood the Government favours a gradual wind-down of the bank, rather than the so-called "good bank/bad bank" model proposed by the bank's management.
But a defiant Mr Lenihan insisted the Government is taking correct decisions and restoring international confidence. "Ireland is still highly regarded in international markets," he said.
"What I'm more concerned about is idle speculation and negativity. Our point of view as a Government is to try and ensure that our reputation is not just, as we've done, enhanced in the money markets but will continue to be enhanced."
He refused to say what his personal preference is for dealing with Anglo Irish Bank, claiming "idle speculation" by cabinet ministers is not helpful.
These comments, he later insisted, were not a dig at the Green Party for speaking out on the future of the bank.
Instead, the minister said he was speaking about the need to make a collective decision around the cabinet table in conjunction with the European Commission.