Ireland warns of Anglo Irish rescue bill

| September 30, 2010 | 0 Comments
Ireland warns of Anglo Irish rescue bill

Ireland’s central bank has warned that a potential rescue for troubled lender, Anglo Irish Bank, will cost up to €34.3 billion (£29 billion).

The figure is much higher than last month’s estimation of between €22-€25 billion and the revised figure is the equivalent of Ireland’s annual taxation revenues.

The central bank said that the nationalisation of Anglo Irish Bank has cost about €29.3 billion, and it may require an extra €5 billion under a worst-case scenario.

Investors are becoming increasingly nervous over Ireland’s financial health and earlier this week, Anglo Irish had its debt rating slashed by credit agency Moody’s.

Moody’s cut the bank’s senior unsecured debt by three notches to Baa3 – just one notch above junk status.

Anglo Irish, which was nationalised in January 2009, was hit particularly hard during the financial crisis.

The slump in the country’s property market resulted in a fall in the value of investments linked to the property market.

Meanwhile, Irish Prime Minister, Brian Cowen, has already sought to reassure markets about Ireland’s economic difficulties.

However, the Irish Government has previously rejected claims that it could have difficulty raising funds and might have to turn to the EU rescue fund - which was established by European Governments and the International Monetary Fund after the Greek debt crisis earlier this year.

In related news, Ireland’s economy only emerged from recession in the first quarter of 2010.

It was believed that Ireland had exited recession in the third quarter of last year but an initial estimate of growth was later revised to show a contraction within the economy.

As a result, Ireland was one of the last euro zone nations to emerge from recession.

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