03 MAR 2011
By Arthur Beesley | Irish Times (Imposing losses on senior bank bondholders valid, says Soros
BILLIONAIRE FINANCIER George Soros says the incoming government has a “legitimate” claim to impose bailout losses on senior bank bondholders and warns Ireland could be “dragged down” for years by Europe’s no-default policy.
Fine Gael and Labour each pledged during the election campaign to tackle senior bond investors. However, as they embarked on coalition talks, EU economics commissioner Olli Rehn ruled out any move in that direction.
Mr Soros waded into the debate yesterday, telling The Irish Times EU leaders should immediately review their policy of postponing until 2013 any debt restructuring in the eurozone. “In the case of the Irish banks, I think the demand that the bondholders should actually have the first burden of the debt of the bank is a very valid demand,” he said on the sidelines of a seminar in Brussels.
“When I compare how Iceland has dealt with the issue – and as a result Iceland today is reasonably quite prosperous as a country – I think that Ireland has a very legitimate claim to push.”
He said he was referring both to senior debt in the banks, whose owners remain fully protected under the EU-IMF rescue, and investors in subordinated debt, who have had haircuts imposed on them.
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