Mr. Paul Gallagher:

Well, of course, firstly might I say that was a terrible and unfortunate consequence of the events that happened and any reasonable person can only be horrified as to that occurring and be very sympathetic for all the difficulties that were caused. My role as a legal adviser was not to make a policy decision in that regard. But one thing just has to be understood, because I think it has become part of the narrative and I think it is fundamentally wrong. And that is that decisions were made to save the banks. Well in my interaction with Government, it wasn't about saving the banks, it was about saving the financial system. And the calculation had to be made as to what would have been the consequences for the people if the financial system collapsed - that was the decision.

And when it came to the bailout, the Government was determined to burn the bondholders. And, in fact, I wrote to Mr. Lenihan, Minister Lenihan, on 29 November when I was finalising what is called the Credit Institutions (Stabilisation) Act and I said, "We can include in that Act a provision to burn the senior bondholders but I understand that the troika have forbidden that." I said, "Nevertheless the position might change and we are dealing with the burning of the subordinated bondholders and one thing, if you would like I can include is I can emphasise in that Act the protection of the deposit holders." Because the idea was to burn the bondholders and protect the deposit holders. And in the recitals to that Act, or the preamble, we emphasised that, for Ireland, a core objective was to protect the deposit holders. And that was to begin the creation of legal structures that if the position changed with the troika, we could then introduce specific legislation to burn the bondholders.

Now, it would be foolish and misleading to suggest that that wouldn't give rise to legal difficulties; it would.

We considered those very carefully and, indeed, post the bailout, I had various meetings to look at that. I had meetings also with IMF representatives and specialist lawyers to consider that and we confirmed repeatedly that that could be done in legal terms, notwithstanding the legal difficulties, and it depended solely of the approval of the troika to doing that, and that as you know was prohibited and was a condition of the bailout.