February 8, 2012 / 8:21 PM / 8 years ago

UPDATE 1-Irish want debt concession if ECB aids Greece

* Fin Min says Greek concession would strengthen Ireland’s hand

* Ireland seeking ECB help in reducing sovereign debt burden

DUBLIN, Feb 8 (Reuters) - Ireland would see any European Central Bank contribution to the restructuring of Greek debt as a precedent that would boost Dublin’s efforts to ease the burden of its own sovereign debt, the country’s finance minister said on Wednesday.

ECB policymakers on Wednesday were divided as to what contribution the central bank might make to a restructuring of Greece’s sovereign debt amid efforts to close a complex deal to unlock a second bailout for Athens.

Ireland, widely seen as the poster child among bailed-out euro zone countries, has been lobbying the ECB to help it reduce the burden of its sovereign debt by cutting the cost to the government of bailing out its banks.

“If the ECB are prepared to make this kind of concession to Greece it would encourage me to think that they might be ready to make concessions on the promissory note to Ireland,” Finance Minister Michael Noonan told state broadcaster RTE.

“I see it, if it occurs, as a strengthening of our negotiating position.”

Officials from the ECB, European Commission and International Monetary Fund on Wednesday were attempting to broker a deal that would open the way for a 130 billion euro EU/IMF rescue for Greece and avoid a disorderly default.

While the ECB has ruled out joining private creditors in voluntarily accepting losses on its Greek bonds, it could provide indirect relief by renouncing profits from bonds it bought at below face value.

The ECB’s 23-member Governing Council, which holds a regular monthly meeting on Thursday, has yet to adopt a position, but some policymakers are reluctant to share the burden, in part for fear of setting a precedent.

The Irish government is discussing several options with the ECB on how to reduce the cost of the bank bailout, including refinancing the promissory notes used to bail out now-defunct Anglo Irish Bank and Irish Nationwide Building Society.

The notes carry an interest bill of 17 billion euros.

Ireland wants to use cheaper loans from the euro zone’s rescue fund, the EFSF, to refinance some 30 billion euros worth of IOUs pumped into Anglo Irish.

Officials from Ireland and the country’s so-called troika of lenders at the EC, the ECB and the IMF are due to complete a technical paper on how to cut the cost of the IOUs for European finance ministers to consider.

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