Business Irish

Monday 19 March 2018

Now burn bondholders in Anglo, says Honohan

Central Bank Governor Patrick Honohan wants to burn Anglo bondholders
Central Bank Governor Patrick Honohan wants to burn Anglo bondholders
Colm Kelpie

Colm Kelpie

Central Bank Governor Patrick Honohan wants to burn Anglo Irish Bank junior bondholders and save the taxpayer up to €300m, the Irish Independent can reveal.

But the Government isn't optimistic and is cautioning about the legal difficulties of a final attempt to recoup some of the almost €30bn injected into the toxic bank.

In one of his last acts before announcing his retirement, Professor Honohan urged the Government to fight the legal case.

And he has advised the Coalition to go as far as hiring one of the world's top debt lawyers, described as a "fairy godmother to finance ministers in distress".

The governor is telling the Department of Finance to block payments to junior bondholders in the now defunct lender.

In emails to one of Finance Minister Michael Noonan's top officials, Prof Honohan said the "moral case" for ensuring that the surplus money from the liquidation of IBRC is returned to the taxpayer is "almost unassailable".

The governor argued that while the sum involved isn't big in the grand scheme, it is still "worth a big legal battle".

Bondholders owed €270m are almost last in line to be paid from the liquidation of over €21bn worth of assets belonging to the IBRC - the remnants of Anglo Irish Bank and Irish Nationwide Building Society.

But payouts to bondholders would come ahead of any repayment of part of the State's €30bn rescue of the scandal-hit boom-time lender. However, Prof Honohan's argument is that under new EU rules to deal with failing banks, taxpayers would no longer be tapped to deal with such payouts.

He said if the State cannot persuade an Irish lawyer to fight its case, it should engage leading US debt lawyer Lee Buchheit, who has worked with Greece and Iceland on debt deals.

Irish Independent

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