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€280m payback hitch

The first repayments due from the Irish banks related to the Government's €7bn recapitalisation will be delayed.

Bank of Ireland is due to pay €280m by February 20 and AIB have a repayment schedule on May 13 to be vested in the National Pension Reserve Fund (NPRF).

However, the NPRF said it won't take any action against Bank of Ireland when it fails to make its first interest payment next weekend.

The EU has temporarily blocked the banks from paying coupons on certain securities until the bank's viability plans are fully assessed and finalised.

Both banks are involved in restructuring talks with the EU at present. The new head of the Nation Treasury Management Agency (NTMA), John Corrigan, has said the non-payment of the coupons would result in the Government being reimbursed to the same value via ordinary shares in the banks.

Mr Corrigan told yesterday's sitting of the Public Accounts Committee that the agency will collect either cash or the equivalent value in shares. However, Mr Corrigan told the Oireachtas that the NTMA would prefer to receive a cash payment.

He said the NTMA expects the EU's so-called coupon block not to be permanent, adding "it would be better to wait for the cash".

But Mr Corrigan could not confirm a date for when the EU Commission would conclude their review, but expected that it could be "a matter of weeks".