Lenihan to reveal full plan for Anglo wrap-up
Published 28/09/2010 | 05:00
THE Government will announce the cost and timescale of the plan to wind down Anglo Irish Bank by the end of this week.
The coalition's approach to negotiating a deal with Anglo's lenders will be closely scrutinised by international markets, amid warnings it will affect the cost of borrowing for the country.
The delay in providing a figure, estimated to be in the region of €30bn, on the Anglo strategy is being partly blamed for the rise in the interest rate being charged on borrowing by the State.
But the coalition hopes to provide some certainty to the markets when the details of the plan are announced by the Central Bank.
Finance Minister Brian Lenihan will brief his cabinet colleagues on the broad outline of the plan at their weekly meeting tomorrow.
The crucial elements of the Government's plan to split Anglo and then gradually wind it down will be announced by the Central Bank later in the week.
Mr Lenihan and his officials in the Department of Finance have been in constant contact with the Central Bank and Financial Regulator regarding the fleshing out of the Anglo plan announced earlier this month.
The minister is understood to have discussed the latest developments in the drafting of the Anglo plan with Taoiseach Brian Cowen yesterday.
Mr Lenihan is also in touch with Communications Minister Eamon Ryan, who represents the Green Party on banking issues.
Central Bank Governor Professor Patrick Honohan and Financial Regulator Matthew Elderfield are responsible for estimating the cost and timeline for the plan.
But Mr Lenihan is being warned that a default on government-guaranteed debt at state-owned Anglo Irish Bank would lead to a funding crisis for the State and the banking system at large.
Goldman Sachs International chairman Peter Sutherland said the maximum saving the Government could make on sharing Anglo's rising losses with debt holders was €5.1bn.
However, the former European Commissioner and Attorney General warned that such a move would "precipitate a funding crisis" for the State and the banks and that the damage would be serious.
Mr Lenihan believes the Government's decision to split Anglo will provide certainty about the bank's future.
When asked about a timeframe for the wind-down earlier this month, Mr Lenihan said it would be "difficult to see it going beyond 15 years".
Mr Lenihan also admits the proposal is not a "silver bullet" to restore international confidence in the Irish economy.