Belfast Telegraph

High Court decision lets Allied Irish buy back bonds

A decision by the Dublin High Court will help Allied Irish Banks (AIB) to negotiate with bond holders to buy back subordinated bonds at lower prices, while work is already under way for similar burden sharing in other banks, Irish Finance Minister Michael Noonan has said.

Mr Noonan in a statement welcomed the court's granting a so-called Subordinated Liability Order.

It will allow AIB in the coming weeks to offer to buy back its outstanding subordinated bonds.

Work is under way for Bank of Ireland and Irish Life -amp; Permanent Group Holdings, which have also received government aid, to start similar subordinated bond buy-back programs, he said.

The Irish government is seeking to recoup some of the huge costs of rescuing Irish banks, which incurred massive losses when their reckless lending to property developers spectacularly crashed.

The banks, which have to date swallowed €43bn (£41bn) in government aid, will likely need €4bn (£3.5bn) more in capital, Irish central bank stress tests showed last month.

Noonan last month said he expected the government to secure €5bn (£4.4bn) in savings across the banking system through the banks buying back subordinated debt.

He had also said that the new coalition government, which took power last month, had been prevented by the European Central Bank from seeking wider burden sharing.

Mr Noonan said the ECB's decision meant the "government is not to pursue burden sharing with senior bond holders in AIB, Bank of Ireland or Irish Life -amp; Permanent."


The amount that could be saved through the banks buying back subordinated debt