The European Commission is open to considering burden sharing of up to €3.5bn on senior debt holders in Anglo Irish Bank and Irish Nationwide but was not aware of the proposal until now.
Finance Minister Michael Noonan made the announcement in Washington yesterday and added that the International Monetary Fund is also backing the plan to burn unsecured senior bondholders in the two nationalised banks.
The Commission did not rule out the proposal yesterday although a spokesman said the plan was news to him.
”We are always ready to consider any proposal in the context of completing the restructuring of the banking sector in Ireland. If one day it lands on our desk we will consider it with our partners in the troika,” a spokesperson for the European Commission said in Brussels today.
“We are not aware of such a proposal,” he added
But the ECB, which in the past has made it clear that it does not favour such a move until after 2013 when a new financial stability mechanism is in place, could scupper the plan.
A spokesman for the ECB would not comment on the issue when contacted by Independent.ie today.
Earlier today, Tanaiste Eamon Gilmore admitted the Government will need the backing of the ECB to impose the burden-sharing.
"The ECB has been aware that it has been the Government's policy from the very beginning to minimize the impact on the Irish taxpayer of the losses that have been incurred by the banks," Mr Gilmore told RTE this morning.
"The Irish Government's position has been from the very beginning that there should be burden-sharing," he said, when asked whether the ECB had been told in advance of Wednesday's announcement.
Gilmore said Ireland would need the support of the ECB and EU bailout lenders if its plan to burn senior debt holders in Anglo Irish and Irish Nationwide were to succeed. It wasn't something Ireland "can do unilaterally", he said.