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Noonan and the ECB President will discuss in Frankfurt “the long-term sustainability of the Irish financial system”, Paul Bolger, a spokesman for the Irish finance minister, said by email yesterday. Those talks occur against the backdrop of a move by the ECB to advocate losses on senior bondholders at crippled euro area banks.
Noonan has been campaigning since September to reengineer about €30 billion of so-called promissory notes -- or IOUs -- used to bail out Anglo Irish and Irish Nationwide, which are currently being wound down. Ireland has injected or pledged €64 billion into its banks over the past three years after the collapse of a domestic real estate bubble.
Former Prime Minister Brian Cowen’s government issued the promissory notes in 2010 rather than raise money in the debt markets. While the securities are currently repayable in annual €3.1 billion instalments for more than a decade, Noonan has said he may seek a bond from the euro area bailout fund to refinance the notes and spread the cost over 30 years.
The notes are currently refinanced through the national central bank’s emergency liquidity assistance programme. The ECB Governing Council has a veto on the provision of this financing.
The ECB’s change of position on senior bank debt emerged yesterday. The institution had consistently opposed handing losses to senior creditors of Irish banks following the near collapse of the country’s financial sector. A key condition to imposing losses is if the bank in question is being wound down, one official said.