ECB chief urges Irish to sort out bank fiasco
Anglo Irish Bank is Ireland's responsibility, European Central Bank governor Jean-Claude Trichet said yesterday, as he urged the Government to take decisions on public spending and the banks.
The comments were made at a press conference in Frankfurt after the ECB decided to keep interest rates unchanged at 1%, and extend the emergency lending measures for European banks until next year.
Questions about Anglo Irish, and the effects of the bailout on the economy, came amid mounting unease about the Republic's ability to honour the national debt, as well as the debts taken on from the banking sector.
The markets are still waiting for the Republic's Finance Minister Brian Lenihan to explain what terms he will attach to the next bank guarantee scheme, while nobody knows what the European Commission will decide this month when it rules on the fate of Anglo's plans to morph into a business bank.
"The Irish banking sector is in trouble," said Marie Diron, an economist at Ernst & Young.
"I think that he (Trichet) is trying to urge a rapid decision. Clearly, the cost of Anglo is going to be very high, and that is leading to a lot of volatility." Mr Trichet declined to comment on Irish bond spreads or the particular situation of individual Irish banks, including Anglo Irish Bank.
"It is the responsibility of the Irish government and the Irish authorities to deal with their banks.
"I have confidence that they will manage these difficulties, as they have done in the past," he said.
"If I'm not misled, (Anglo Irish) is a bank that it is owned by the Government, thus it is the responsibility of the Government to take the appropriate decisions," he added.
Meanwhile, toxic loan agency NAMA in the Republic is expected to have the final say on whether the proposed "ghost" headquarters of Anglo Irish Bank are finished or sold off.
The eight-storey shell building in Dublin's docklands, part of a package of developments now controlled by NAMA, was used as security on loans that NAMA acquired from developer Liam Carroll.
The Republic's planning service, An Bord Pleanala, yesterday gave its approval for the building to be completed.