We'll pursue plan B to cut debt if Anglo IOU bid fails, says Noonan
IRELAND will pursue an "alternative" way of reducing the bank bailout costs if efforts to change Anglo Irish Bank's promissory note don't succeed, Finance Minister Michael Noonan insisted yesterday.
The comments come amid mounting speculation that the Spanish banking crisis could be a 'game changer', which could open the way for a more fundamental improvement to Ireland's banking debt than the one the Government has been pursing.
Spain may become the first country to get Europe's rescue fund to directly bail out its banks, a major improvement on the 'old' model of a whole country entering into a bailout programme just so it can rescue its banks.
Ireland has been pursuing a far more complex European solution to its bank debts, by asking the bailout fund to facilitate an advantageous refinancing of the €30bn in IOUs to rescue Anglo Irish Bank.
Asked whether the Spanish developments could create a "precedent" for Ireland to follow, Mr Noonan told reporters that any direct bailout of Spain's banks would be an "interesting policy development" that Ireland "would watch with great interest".
"If we cannot get what we are looking for around the pro-notes (Anglo IOUs), there would be an alternative to give the same effect in reducing the burden of the legacy debt that was imposed on us," he said.
He declined to be drawn on what that alternative might be or on whether Ireland would demand equal treatment with Spain, saying he had not yet been fully briefed on the Spanish proposals and would learn more over the coming days.
Several sources say efforts to garner political support for the Anglo plan have been effectively suspended until the fiscal compact treaty at the end of the month, since Europe won't agree to help Ireland further until there's certainty about Ireland's European commitment.
Mr Noonan insisted, however, that the Government was still "actively" campaigning on the Anglo debt issue and said he would raise it "on the margins" of this week's eurozone meetings.
"There are always opportunities to raise Irish issues," he said.
"I don't drag them in and upset people but if the conversation moves in a particular direction I'll be explaining the Irish position; I always do and I have people in mind I need to talk to."
A long-awaited "technical proposal" to change the Anglo debt is being drawn up by officials from the ECB, EC and IMF but is not expected until the autumn.
The Government claimed a partial victory earlier this year when it was able to effectively defer a €3.1bn cash payment due to the former Anglo (now Irish Bank Resolution Corporation) at the end of March.