The incoming Irish government is not likely to resort to formal bankruptcy or liquidation to deal with Ireland’s troubled banks, according to Fitch Ratings. Fitch said liquidation could be an expensive option because of a number of considerations, such as “the large amount of government-guaranteed obligations relative to the senior unsecured unguaranteed obligations.” Other factors include the need to keep Irish domestic banks solvent to preserve the large amount of funding from European Central Bank and Central Bank of Ireland, and “the subordinated status of government equity and preference stock investments in banks.”
