€35bn bailout not my preferred option -- Honohan
Published 30/11/2010 | 05:00
CENTRAL Bank governor Patrick Honohan yesterday admitted the latest €35bn banking bailout was not his "preferred" option for resolving the financial crisis.
In a series of interviews, Prof Honohan also confirmed there were talks about forcing losses on banks' senior bondholders.
And he said our visitors from the IMF and the European institutions had found "no new hole" in the Irish banks.
The comments come after the Government announced a rescue plan that will see €10bn ploughed into the banks by February, with another €25bn on standby to tackle further losses.
"If I had an unlimited menu of instruments, rather than just putting in capital, I would have preferred to receive. . . an insurance scheme against these downside risks," he said.
"That would have been a more adapted instrument to use, but it's not available."
Prof Honohan also addressed the controversial issue of forcing losses on senior bondholders, a suggestion that triggered panic in the markets last Friday.
"The idea was floated in relation to a small block of unguaranteed senior bondholders," he said. "Those ideas have been taken off the table now."
Asked if the banks were "hiding" another batch of massive losses, Prof Honohan said there was no indication of that. "Some of the people from outside came in saying we'll probably find a hole, but they didn't find a hole."