Europe warns of pain for Allied Irish creditors

first_img by Taboolaby TaboolaSponsored LinksSponsored LinksPromoted LinksPromoted LinksYou May LikeMisterStoryWoman Files For Divorce After Seeing This Photo – Can You See Why?MisterStoryTotal PastThe Ingenious Reason There Are No Mosquitoes At Disney WorldTotal PastMoneyPailShe Was A Star, Now She Works In ScottsdaleMoneyPailSerendipity TimesInside Coco Chanel’s Eerily Abandoned Mansion Frozen In TimeSerendipity TimesBrake For ItThe Most Worthless Cars Ever MadeBrake For ItBetterBe20 Stunning Female AthletesBetterBeMagellan TimesThis Is Why The Roy Rogers Museum Has Been Closed For GoodMagellan TimesElite HeraldExperts Discover Girl Born From Two Different SpeciesElite HeraldHealthyGem”My 600-lb Life” Star Dropped 420 Pounds, See Her NowHealthyGem whatsapp Europe warns of pain for Allied Irish creditors whatsapp Show Comments ▼ ALLIED IRISH BANKS’ junior bondholders will have to take a big hit in a future restructuring, the European Commission has warned when approving billions of euros in state aid for Irish banks.Brussels’ threat triggered a fall in Irish sovereign debt, stoking fears the ongoing financial crisis means more pain including the spectre of forced discounts for investors, despite an €85bn (£72.5bn) EU/IMF bailout.“With regard to Allied Irish Banks, the final decision will depend on the Commission being satisfied (it) will be commercially viable in the long term without further injections of taxpayers’ money (and)…that there is a significant contribution by the bank’s shareholders and subordinated debtholders,” the Commission said in a statement.Years of reckless lending brought Ireland’s banks to the brink of collapse, forcing the government to seek emergency aid and requiring Irish people to endure years of cutbacks and tax increases in return.“What we’ve had in the last few weeks is evidence that there will be a forced restructuring of the subordinated debt – the fear is, of course, someone has to pay,” said Steven Major, global head of fixed income research at HSBC in London.With a parliamentary election looming early next year, Prime Minister Brian Cowen wants junior bondholders in the banks to shoulder some of the cost of propping up the industry and ease the burden on angry voters.But legislation allowing the government to impose losses on subordinated bondholders could face a possible constitutional veto if the country’s president decides to refer the law to the Supreme Court.The controversial bill gives the state wide-ranging powers to restructure the banking industry. But its scope has raised objections from the European Central Bank and opposition politicians, who warn it will make Finance Minister Brian Lenihan a “one-man legislature”.“It looks likely that President McAleese will send the bill to the Supreme Court,” said Fergal O’Leary, head of capital markets at Glas Securities. “I would say there is a market expectation the Supreme Court might very well turn it down.”If McAleese decides to refer the legislation to the Supreme Court it could delay government plans for junior creditors in Irish banks to swallow losses as agreed under the bailout.The premium investors demand to hold Irish debt over benchmark German bunds widened 32 basis points to 622 basis points today.Ireland’s bailout will cover its sovereign funding requirements for the next three years and provides €35bn in additional capital for the banking sector. Sharecenter_img alison.lock More From Our Partners Killer drone ‘hunted down a human target’ without being told tonypost.comNative American Tribe Gets Back Sacred Island Taken 160 Years Agogoodnewsnetwork.org980-foot skyscraper sways in China, prompting panic and evacuationsnypost.comRussell Wilson, AOC among many voicing support for Naomi Osakacbsnews.comA ProPublica investigation has caused outrage in the U.S. this weekvaluewalk.comBiden received funds from top Russia lobbyist before Nord Stream 2 giveawaynypost.comBrave 7-Year-old Boy Swims an Hour to Rescue His Dad and Little Sistergoodnewsnetwork.orgPolice Capture Elusive Tiger Poacher After 20 Years of Pursuing the Huntergoodnewsnetwork.orgAstounding Fossil Discovery in California After Man Looks Closelygoodnewsnetwork.org‘Neighbor from hell’ faces new charges after scaring off home buyersnypost.comI blew off Adam Sandler 22 years ago — and it’s my biggest regretnypost.comInside Ashton Kutcher and Mila Kunis’ not-so-average farmhouse estatenypost.comFlorida woman allegedly crashes children’s birthday party, rapes teennypost.comSupermodel Anne Vyalitsyna claims income drop, pushes for child supportnypost.comMark Eaton, former NBA All-Star, dead at 64nypost.comMatt Gaetz swindled by ‘malicious actors’ in $155K boat sale boondogglenypost.comUK teen died on school trip after teachers allegedly refused her pleasnypost.comWhy people are finding dryer sheets in their mailboxesnypost.com Tuesday 21 December 2010 1:54 pm Tags: NULLlast_img read more