AIB bondholder challenges unfounded - Irish finance min
DUBLIN, April 22 |
DUBLIN, April 22 (Reuters) - Legal challenges by subordinated bondholders of Allied Irish Banks (ALBK.I) to Irish government plans to impose a haircut on their investments are unfounded, the country's finance minister said on Friday.
A High Court order last week handed the government the right to impose changes to the terms of 2.6 billion euros worth of AIB subordinated bonds. Finance Minister Michael Noonan said he expected the bonds to lose around 80 percent of their value. [ID:nN14249964]
But subordinated bondholders launched two challenges this week, with a case due to be heard on May 9. [ID:nN20182021]
"The minister considers that these challenges are entirely unfounded. They will be dealt with by the High Court in due course," a finance department spokesman said in a statement after the five-day period for challenges to the order lapsed.
"The government remains fully committed to its previously stated goal of burden-sharing with subordinated bond holders, ideally in a market-based manner, as part of the overall process of recapitalisation of the banks."
Ireland had to take an 85 billion euro ($120 billion) bailout from the European Union and International Monetary Fund last November after the collapse of a construction boom crippled the banks that had recklessly financed it.
The government last month said it would seek significant contributions from junior debt-holders in its banks to help pay for recapitalising the industry, a cost that has so far fallen mainly on taxpayers.
Irish lenders have around 7 billion euros worth of outstanding subordinated bonds, according to Central Bank figures released earlier this month. (Reporting by Padraic Halpin; Editing by Hugh Lawson)
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