Burden-sharing with senior unguaranteed debt holders in Anglo Irish Bank

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The ECB have point blank refused to allow this already. Has something changed?

Obviously the situation has been made more possible by the splitting off of the deposit book meaning that any contagion would be more contained.

Would this leave us in a situation where some of the €30bn injected to date could be recovered? Or is it to avoid another round of recapitalisations I wounder!!!

If I understand it correctly, the total of these bonds is €3.7 billion.

So if they are written off completely, the state would save €3.7 billion.

The Central Bank seems to think that the capital injected by the state into Anglo and Irish Nationwide is suffient to meet their potential losses. So if this plan goes ahead, the state would eventually get back up to €3.7 billion.

It doesn'a affect any bank other than Anglo or Irish Nationwide.

Brendan

The ECB haven't changed their mind on this. I can't decide if this is political posturing for domestic reasons or if it is tactical in the fight to get a better deal on the bailout. I can see the logic in what they are proposing and I think the market would probably accept it in the case of Anglo because they have basically followed the capital structure i.e. equity and sub debt were wiped out already. The problem is that if the ECB allow if for one bank, the market will start asking if they will allow if for others including those in Greece and Portugal. There is still huge contagion risk with this move like there was when they first vetoed the idea.

The savings would only be a % of the €3.7 billion. I would imagine a haircut of between 30-50% could be imposed (probably at the lower end).

I can't see it happening and I don't see the benefit of them playing this game through the media.

The problem is that if the ECB allow if for one bank,

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I heard Eamon Gilmore on the radio this morning arguing that as Anglo and Irish Nationwide are no longer banks, this doesn't really apply.

Brendan

I just took it for political maneuvering. After all, when our politicians were declined any deal on the EB/EU/IMF loan rate, they were told that they needed to come back to the table with something to negotiate with. For a fact, the EU faction were looking for a concession, rather than the opposite, but it's good to see some imaginative thinking being applied to the negotiation process.

Do people realise that not all deposits have moved out of Anglo. There is a very real threat that deposit holders (non speculative investments) may also be burned as part of any burden sharing. This issue is not clarified by Mr Noonan.

pmorrissey said:

Do people realise that not all deposits have moved out of Anglo. There is a very real threat that deposit holders (non speculative investments) may also be burned as part of any burden sharing. This issue is not clarified by Mr Noonan.

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I didn't realise this - what deposits are remaining?

I believe there is circa €27 million of credit union deposits still with Anglo - They are tracker deposits.