Tánaiste Joan Burton has made clear she does not want junior bondholders in the former Anglo Irish Bank to be paid.
“The Tánaiste is resolute in her view that the junior bondholders in question should not and will not be paid,” a spokesman said.
She was responding to Central Bank governor Patrick Honohan’s call to the Department of Finance to block payments to junior bondholders and return any surplus money from the liquidation of Irish Banking Resolution Corporation (IBRC) to the taxpayer.
Earlier, Minister for Finance Michael Noonan said there may not be enough money to pay the junior bondholders because they come at the “end of a hierarchy”.
Speaking on his way into Cabinet on Tuesday, Mr Noonan said the liquidation was going “very well” and it looked as if all secured creditors would be paid.
“There’s a residue then that’ll move on to unsecured creditors. There’s a ranking order in that,” he said.
Mr Noonan said the State represented about 70 per cent of the unsecured creditors, “and that should be satisfied”.
He said money was owed to credit unions that were unsecured and they would get their full money back as well. “And then there are people involved in commercial activities who have outstanding bills,” he said.
“At the end of the process in two, three, four years time, the issue of junior bondholders will come up. And we’ll take Patrick Honohan’s advice very seriously if it comes to that,” Mr Noonan said.
“But there may not be enough money there anyway because they come at the end of a hierarchy.”
Emails reported on in the Irish Independent today show Mr Honohan telling a Department of Finance official the “moral case” for ensuring that the surplus money from the liquidation of IBRC is returned to the taxpayer was “almost unassailable”.
