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Rehn ready to consider easing the cost of Anglo Irish bailout

EUROPEAN Commission economics chief Olli Rehn promised yesterday to "carefully consider" Ireland's bid to cut the cost of Anglo Irish Bank's bailout and discuss the matter with senior officials in eurozone countries, the Irish Independent has learned.

Sources also confirmed that the European Central Bank has said it is open to proposals to replace Anglo Irish Bank's €30bn promissory note, or Government IOU, for another instrument.

The news comes after Finance Minister Michael Noonan met Mr Rehn in Brussels yesterday morning and later travelled to Frankfurt for his first meeting with ECB President Mario Draghi.

Both meetings were part of a campaign by the Government to cut the "very expensive" terms of Anglo's 2009 bailout, which include annual payments of about €3bn for more than a decade.

At the meetings, Mr Noonan stressed the burden of the current arrangement and the sacrifices that Irish people are making in order to honour the payments as well as other payments to bank bondholders.

He also pointed out that Ireland had fulfilled all the conditions of its bailout package, and that Irish people felt that it was unfair that Ireland isn't getting any concessions while Greece is being allowed to impose 50pc losses on its bondholders.

Sources said that both the ECB and the Commission had accepted the political and economic arguments for reducing the cost of the bailout, but neither had committed at this point to pushing the cause for Ireland.

It is understood that Mr Rehn has committed to "carefully consider" the plans and discuss them with senior officials from other eurozone countries.

The ECB delegation is believed to have indicated that they are open to the general idea being advanced by the Government -- namely that Anglo's promissory note be replaced with a bond from Europe's EFSF bailout fund. (The Government would then pay back the EFSF over a longer period of time).

But the ECB won't commit to anything further until the Government has actually gotten agreement from the EFSF to pursue that course. The EFSF would have to consult all 17 eurozone members to assume that role.

Mr Noonan described the meeting with Mr Rehn as "fine" but declined to get into the specifics, pointing out that their conversation was "confidential".

"It's too soon to say whether or not we'll be successful (with the restructuring)," he added. "We're not putting any deadline on it."

Promissory notes

"Technical talks are currently under way . . . on the challenges posed by the use of these promissory notes in bank recapitalisation," Mr Rehn's spokesman said.

"Mr Rehn indicated that this analysis should continue." He declined to comment further.

The ECB/IMF/EC troika have committed to delivering a technical paper on ways to restructure the Anglo bailout by February.

Speaking in Frankfurt, Mr Noonan said he'd had a "good" meeting with Mr Draghi, adding that it was "too soon to say" whether Ireland's objective would be achieved.

A spokesman for the ECB declined to comment.

In Brussels yesterday, Mr Noonan also told fellow finance ministers of Ireland's ongoing concerns about a proposed tax on financial transactions and said Ireland would not support any efforts to "fast track" its imposition.

"I think there are sufficient considerations which require reflection and detailed analysis," he said, pointing to the "displacement effect" that could occur if eurozone countries were the only ones who had to pay the tax.

Irish Independent