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Enda doesn't see 'any circumstances' in which Anglo junior bondholders will be paid

The government is playing down fears that Anglo junior bondholders are in line for repayment.

Image: /Photocall Ireland

ENDA KENNY HAS said that he does not see “any circumstances” in which junior bondholders in the former Anglo Irish Bank will be repaid when the bank that succeeded it is liquidated.

The Taoiseach was speaking as the government has sought to play down fears that such a possibility will arise in the wake of comments by Michael Noonan last week.

Speaking to reporters in Dublin today, Kenny said: “Fianna Fáil put the taxpayers first in line to suffer with the bank guarantee. This government put the taxpayers first in line to benefit.”

“I do not see any circumstances, any circumstances, in which junior bondholders will be paid out of the liquidation of IBRC.”

Earlier, Transport Minsiter Paschal Donohoe insisted that he did not believe they would be repaid as they are “so low down the pecking order”.

He told RTÉ’s Morning Ireland that the Irish taxpayer is “well ahead” of junior bondholders who are theoretically in line for up to €280 million of payments after Irish Bank Resolution Corporation’s (IBRC) liquidation is completed.

“Because they’re so low down the pecking order I don’t believe they will be paid,” he insisted while acknowledging that it is “theoretically” possible they could be.

‘Get up the yard’

Earlier on the same programme, the Trinity finance professor Brian Lucey said that repayment of junior bondholders would be morally wrong, saying most of them were vulture funds.

He called on the government to change the law governing the way in which banks are liquidated and to tell the junior bondholders to “get up the yard”.

Fresh concern and anger has been expressed at the prospect of repayment after Finance Minister Michael Noonan told the Dáil last week that they would be legally entitled to a dividend if they submitted a valid claim.

He said this would only happen if there was enough money left after all unsecured creditors – of which taxpayers make up 70 per cent – are paid first.

The government is of the view that it will not get to a stage where there is money left to repay Anglo junior bondholders.

A Department of Finance spokesperson told RTÉ last night: ”The liquidation of IBRC would have to be extremely successful in order for enough money to be left to pay them.”

Yesterday, the Tánaiste Joan Burton ruled out the possibility that junior bondholders in the former Anglo Irish Bank would be repaid from the liquidation of IBRC.

She told The Week in Politics: “It is completely unlikely to happen because in the queue before the junior bondholders are the Irish people.”

Posturing

Also on Morning Ireland, the independent TD Shane Ross said there is “a lot of posturing going on” over the issue and said that the government must firmly rule out bondholder repayment.

“It’s absolutely unacceptable that junior bondholders that should be paid at all,” he said.

In a statement earlier, the Fianna Fáil finance spokesperson Michael McGrath said the government should issue a direction order to the special liquidator at IBRC that such payments should not be made.

“It is entirely within the gift of the government to categorically rule out payments being made to the remaining subordinated bondholders in IBRC and this is precisely what the government should do,” he said.

First published 8.59am 

Read: Anglo junior bondholders may still get pay-outs

Read: 30 Days in September: An Oral History of the Bank Guarantee

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Hugh O'Connell

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