BRUSSELS (MNI) – Officials in the EU-IMF mission to Dublin are
examining how senior bondholders might shoulder some of the cost of
restructuring Ireland’s banks, the Irish Times reported on Friday.
Several proposals are on the table, the national newspaper said,
citing sources close to the negotiations.
One idea is to convert bank debt to equity shares. Another is to
give investors a choice to inject fresh capital into the banks or face a
cut in their investment, the newspaper said.
The newspaper said that as talks on a potential E85 billion bailout
deal intensify, the Irish government is trying to reduce the cost to the
state by minimizing the interest bill on the emergency loans.
It said measures to repair the banking system are expected to be
announced over the weekend — before markets open on Monday.
Officials from the International Monetary Fund, the European
Central Bank and the European Commission are currently in Dublin
thrashing out the deals of an aid package said to be worth around E85
billion, which will come with strong conditions attached and involve a
restructuring of Ireland’s banking system.
The cost of bailing out Ireland’s embattled banking system will
push the country’s budget deficit to 32% of its GDP this year, way above
of the EU’s stipulated 3% limit. On top of that, Ireland’s banks remain
heavily dependent on the ECB for funding.
–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com
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