Lenihan refuses to shoulder blame for bank crisis
FINANCE Minister Brian Lenihan yesterday refused to shoulder the blame for the multi-billion euro bailout of our scandal-hit banks.
He insisted the billions of public money going into the Irish banks would not be lost forever, as the State would end up owning "the bulk of the banking system".
Mr Lenihan used his Budget speech to once again defend the Government's handling of the banking crisis.
Many blame the multi-billion cost of the banks' bailout for the brutal measures announced yesterday.
But Mr Lenihan insisted much of the commentary was "plain wrong".
"It's true that the State has had to inject large amounts of capital into the banks," Mr Lenihan said. "In return, the State will own the bulk of the banking system."
The State already owns 36pc of Bank of Ireland and will own more than 95pc of AIB by February.
Anglo Irish Bank, EBS and Irish Nationwide Building Society are already 100pc owned by the taxpayer.
Mr Lenihan also insisted that Irish taxpayers weren't covering all the banking losses, and that investors in the banks weren't getting off scot-free.
Banks operating out of Ireland have made "unforgivable" loan losses of €70bn to €80bn, Mr Lenihan said, but "tens of billions" were borne by the shareholders of foreign banks.
Those who loaned money to Ireland's banks had also taken losses of about €7bn to date, Mr Lenihan said, pointing to the discounts accepted by so-called 'subordinate bondholders'.
The Government is now preparing legislation to "facilitate" further "burden-sharing" with these subordinate bondholders, who hold the riskiest bank debt.
"There is a limit to burden-sharing," Mr Lenihan said.
"There is simply no way this country, whose banks are so dependent on international investors, can renege on senior bondholders against the wishes of our European partners."
Senior bondholders take the lowest interest rates and enjoy the same legal status as depositors, making it very difficult to force losses on them.