Belfast Telegraph

Saturday 23 May 2015

Republic 'making progress' in bid to review bailout, claims Noonan

Irish Finance Minister Michael Noonan has said a shift in European Central Bank policy on "burning" senior bondholders could strengthen the Republic's hand in a bid to renegotiate the bank bailout.

After meeting ECB president Mario Draghi in Frankfurt, Mr Noonan said as most senior bondholders in Irish banks have been paid off, any shift on the issue should be "reflected in the Irish programme in some other way".

Mr Noonan said Ireland was "making progress" in a bid to review the bank bailout after an agreement at an EU summit in June to take a second look at the Government's bank-induced debt burden.

Mr Noonan is understood to have brought up the promissory notes with Mr Draghi, but eurozone sources say that technical work on replacing the notes - probably with an ESM bond - has still to be finalised.

ECB president Mario Draghi raised the issue of imposing losses on senior bondholders, who are the last in line to share the cost of bank failures, at a meeting of euro finance ministers last week, in the context of banks that are "non-viable".

Ireland was prevented from imposing losses on senior bondholders in the now-defunct Anglo Irish Bank by the ECB's former president Jean-Claude Trichet.

However, a deal on senior bondholders is still some way off, as it rests on the creation of a euro banking supervisor within the ECB and on changing the rules of the European Stability Mechanism rescue fund.

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