'We will paddle our own canoe' -- Lenihan
Published 06/10/2010 | 05:00
Finance Minister Brian Lenihan told international investors last week "we will paddle our own canoe" when asked could he envisage Ireland needing outside assistance.
Mr Lenihan, answering questions during a private call with key investors, denied the country would need outside help from the European Union or IMF.
A tape of the call with mainly UK investors also revealed that Mr Lenihan said he saw no evidence that retail investors were withdrawing money from Irish banks, with Ireland's island status making this unlikely.
"Ireland is an island and in any island people tend to stay with their local bank," he said.
UK newspapers have reported that an earlier attempt to stage the call was abandoned after callers abused Mr Lenihan and made chimp noises, but this account has been strongly denied by the Department of Finance.
The call involved Mr Lenihan, the National Treasury Management Agency's banking and economics advisers Rossa White and Michael Torpey, and the NTMA director John Corrigan. It was hosted by Citi, which is a primary dealer for Irish government bonds.
One caller asked Mr Lenihan did he ever envisage Ireland needing the European Stabilisation Fund. "Ireland will do what it has been doing in recent years, we will paddle our own canoe," said Mr Lenihan.
He said the country would take "all steps necessary" to keep itself out of the fund, which is headed up by former IMF official Klaus Regling. He said there were absolutely no plans for Ireland to access the fund and this had been made clear by Ollie Rehn, the EU's commissioner for economic affairs. Questioners also wanted to know about how strong bank funding was at present. "Retail deposit flight, I don't see that as a great danger," he said. "I haven't seen any evidence of retail deposit flight," he added, saying that customers here had long-term relationships with their banks built up over decades.
"Clearly corporate deposits are a problem in all countries," he said.
Most of the calls were dominated by concerns over the position of subordinated bond- holders, in Anglo and Irish Nationwide.
Mr Lenihan reassured the callers that Ireland would not in any way dishonour obligations to senior debt holders. He also denied there were any plans to change the terms and conditions for AIB or Bank of Ireland subordinated bondholders. Mr Lenihan said there had been a lot of "noise" around the issue of bondholders, but as the minister responsible he was not prepared to push the "nuclear button" on senior bondholders, who ranked in seniority with depositors.
He said no European country could comprehend applying haircuts to depositors or senior bondholders.