Dáil debates

Tuesday, 20 January 2009

Anglo Irish Bank Corporation Bill 2009: Second Stage

 

3:00 am

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)

I am turning to that point now, which was implicitly raised by Deputy Bruton. Bondholders are not exclusive to Anglo Irish Bank. Allied Irish Bank and Bank of Ireland have substantial numbers of bondholders as well. The position of bondholders is that there is no extension of the guarantee to them under this legislation. This legislation nationalises the shareholding in Anglo Irish Bank. This includes ordinary and preference shares. Bondholders are debt.

At the time of the guarantee it was agreed that not all debt should be guaranteed so there is a share of unguaranteed debt that is not share capital. Such unguaranteed debt in respect of Anglo Irish Bank debt remains where it has been in the bank to date. In other words, the bank has the normal obligations that any bank has with regard to such bondholders. To send any other signal in this legislation would undermine our reputation and our creditworthiness as a country because similar bonds and securities are held by other financial institutions. The legislation provides that the bank, like any other bank, should perform its obligations in respect of those bonds. That does not mean the bonds have a guarantee.

Deputy Bruton is envisaging a winding up of the bank. That is the motivation presupposed by his question. In other words, what will be the position of bondholders in the event there is an insufficiency of assets in the bank to meet them at the conclusion of the bank's operations? I am not contemplating that possibility in this legislation. What is envisaged in this legislation is that the bank is a going concern. In opening this debate, I stated that commercial entities can either function as going concerns or as liquidated entities. I am not announcing a liquidation in this House, I am providing for the continuance of this operation as a going concern.

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