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Inquiry told payments worth €14.3bn may have been avoidable

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The legal advisor to the former government has said it WOULD have been legally possible to burn the bondholders of Ireland's banks, without customers having to lose their deposits.

The advice from the former attorney general Paul Gallagher appears to contradict the claims of some former ministers.

Ministers in the former administration have consistently claimed that it would have been impossible to 'burn' bondholders without also enforcing a haircut on deposits, because the two were considered legally equal.

However today Mr Gallagher has said that although it would have been difficult, it was legally possible to break this link and enforce losses on bondholders without depositors also taking a hit.

He said this had also been accepted by the Troika - but that the lenders simply refused to allow any burden-sharing under the bailout programme, making the prospect obsolete.

Unsecured senior bondholders were paid around €14.3 billion under the period of the bank guarantee - much of it as a result of the state's huge investment in the banking sector.

Mr Gallagher's evidence seems to suggest that these payments could have been avoided without depositors also facing any losses, but for the Troika's stance.

Our political correspondent Gavan Reilly filed this report for Today FM's National Lunchtime News:


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