Professor Patrick Honohan:

The point about this is that if the Government took action and said, "We are liquidating this bank" or "We are cutting them out of most of what they do", a bondholder watching carefully would immediately say, "I think this bond is now payable by the bank and it cannot pay it, therefore, I am going to go straight to the guarantee because the guarantee is written like that and the Government will have to pay it". The Government could say "No" and it could go to court, but it would be very difficult for them to avoid that.