Brian Lenihan Jnr (Dublin West, Fianna Fail)

I would like to put that on the record. Given the nature of the banking crisis, it is understandable that commentators and some Deputies would canvass, examine and explore various options. Regarding Deputy Michael Ahern's question, were such a decision taken, someone would need to take responsibility for it. That responsibility would be a grave one. I mentioned the legal issue, in that senior bondholders rank equally in our law with depositors, so any haircut would apply equally to depositors, which would have a significant economic consequence for the State and its reputation abroad. Apart from that, there are practical economic considerations, including the fact that other banks and the NTMA rely on bond finance to fund themselves. All of this finance is accessed on international markets, often from the same borrowers who finance the different institutions. While there is some validity in the distinction drawn between sovereign debt markets and bank debt markets, there is also considerable overlap, including reputational overlap. In addition, Ireland has managed to attract a great deal of international investment in the multinational sector. Were Ireland to default on senior debt, it would raise serious reputational issues within that sector.

Bank employees are making representations about their futures and the viability of the banking sector on a constant basis.

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