The European Central Bank (ECB) yesterday cleared a deal to liquidate the former Anglo Irish Bank and ease the €28 billion (£24bn) debt burden from its nationalisation.
The Republic of Ireland’s Taoiseach Enda Kenny described the agreement as a “historic step on the road to economic recovery”.
Following months of delicate negotiations between the Irish government and Frankfurt, ECB president Mario Draghi said members of the bank backed the proposal to reschedule debt.
The agreement came after Dublin rushed through emergency laws to liquidate Anglo Irish in the early hours of yesterday morning. Liquidation will enable Dublin to delay the repayment of debts it took on to rescue Anglo Irish.
Draghi declined to discuss the deal in detail, and would only say: “The governing council unanimously took note of the Irish operation.”
It is understood the Irish government put forward a plan to change expensive promissory notes used to fund the former Anglo Irish operation into long term government bonds.
That means it would avoid having to pay a politically toxic €3.1bn until 2023 to service the note it issued to underwrite the failed bank during a meltdown of the main Irish lenders after a real estate bubble burst in 2008.
Kenny said the liquidation “closes a sad and tragic chapter in our economic history”. His comments came at the end of a special session of Ireland’s lower parliamentary house that stretched until 3am as lawmakers rushed through the winding up of the failed bank.
Anglo Irish’s assets, between €12bn and €14bn, will be transferred to the state-run National Asset Management Agency which will pay for them by issuing its own state-backed bonds.