Feb 27 Ireland's main opposition party, the
centre-right Fine Gael, looked set on Sunday to sweep up the
final seats needed to lead coalition talks after an election
victory that crushed its long-time rival Fianna Fail.
During the campaign the right-leaning party withdrew a
previous threat to unilaterally restructure bank debt if it won
Here are some extracts from its banking strategy and recent
announcements on the sector:
* EUROPEAN SUPPORT FOR BANK RECAPITALISATION:
-- The terms of reference of the European Financial
Stability Fund (EFSF) and/or European Financial Stability
Mechanism (EFSM) should be renegotiated to allow them to take
equity and long-term debt investments in systemically important
European banks such as Allied Irish Banks (AIB) (ALBK.I) and
Bank of Ireland (BKIR.I).
-- A similar option is that Ireland could buy "insurance"
from the EU against the risk (small as it is) that losses in
Irish banks will be significantly greater than currently
projected by regulatory authorities.
-- Either of these options would be appropriate for Bank of
Ireland and AIB, and would cap the Irish state's exposure to
further losses or so-called "tail risks" in the banking system,
helping to restore confidence in the state's own financial
* RESTRUCTURING THE DEBTS OF TROUBLED BANKS:
-- Fine Gael in government will force certain classes of
bond-holders to share in the cost of recapitalising troubled
-- This will be done unilaterally for the most junior
bondholders (owners of preference shares, sub-ordinated debt and
similar instruments), but could be extended -- as part of a
European-wide framework - for senior debt, focusing on insolvent
institutions like Anglo Irish [ANGIB.UL] and Irish Nationwide
[IRNBS.UL] that have no systemic importance.
* MORE SUSTAINABLE FUNDING FOR IRISH BANKS:
-- Fine Gael will seek to collaborate with U.S. regulatory
authorities to collate the dollar assets of Irish banks (up to
$50 billion) that could be used as security to secure funding
from the U.S. Federal Reserve.
-- Rather than selling assets at fire-sale prices with the
losses covered by already over-stretched Irish taxpayers, Fine
Gael would negotiate with the EU/ECB to fund, on a longer-term
basis, the transfer at par value of relatively-secure Irish bank
loan books -- such as tracker mortgages -- into a "warehouse" or
Special Purpose Vehicle.
-- This might involve the EU funds buying long-term bonds to
fund such entities.
* STOPPING FURTHER ASSET TRANSFERS TO NAMA:
-- Fine Gael does not believe that transferring the land and
development loans of Irish banks of less than 20 million euros
to the state-run National Asset Management Agency (NAMA) is in
the best interests of the Irish economy, and will seek a mandate
from the people to renegotiate this element of the programme of
support from the IMF and EU.
-- As an alternative, Fine Gael will force Irish banks to
take loss provisions against these loans similar to the haircuts
that would have been applied by NAMA.
* SHUTTING DOWN DEAD BANKS:
-- Anglo Irish Bank and Irish Nationwide have no further
role to play in the Irish economy. A Fine Gael government would
wind up both institutions by the end of 2011, by transferring
their remaining assets and deposits to other financial
institutions or other asset recovery vehicles as appropriate.
-- Further losses incurred in this process will be shared
with remaining unsecured bondholders.
(Reporting by Carmel Crimmins; Editing by Angus MacSwan)