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Noonan Says ECB Wants Stronger Collateral for Anglo Irish Notes

March 15, 2012

Irish Finance Minister Michael Noonan said the European Central Bank is “not enamored” by the structure of about 30 billion euros ($39 billion) of promissory notes used by the state to bail out Anglo Irish Bank Corp.

“You could take it that the ECB were never particularly happy with the collateral provided by the promissory notes and would like stronger collateral,” Noonan said in an interview with Irish state-owned broadcaster RTE Radio. Noonan spoke from Paris after meeting his French counterpart Francois Baroin.

Ireland nationalized Dublin-based Anglo Irish in 2009 and Irish Nationwide Building Society a year later as their loan losses soared following the collapse of a real-estate bubble. To avoid injecting cash immediately into the lenders, the state pledged to give the money over more than a decade by issuing promissory notes -- or IOUs. The two lenders merged last year and were named Irish Bank Resolution Corp.

Currently, IBRC uses the notes as collateral to access emergency funding from the country’s central bank.

Noonan is discussing with Ireland’s so-called bailout troika, the International Monetary Fund, the European Central Bank and European Commission, on how it can repay the cost of bailing out the lender over an extended period at low rates.

The ECB will be “crucial” in any decision to restructure the notes, Noonan said in the RTE interview today. The changes that the ECB is “requesting will have to align with our interests” and position Ireland so the markets can see that the country can repay its debts, he said.

Noonan said it was also “quite positive” that the troika was working on a technical paper on how the notes could be re- engineered, rather than Ireland seeking support from 26 other European countries.

Noonan didn’t rule out an agreed delay on the next 3.1 billion-euro annual payment on the promissory notes, due at the end of March, RTE said.

To contact the reporter on this story: Joe Brennan in Dublin at

To contact the editor responsible for this story: Edward Evans at

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