The Irish Government’s credit rating was AA when the first Promissory Note was issued; subsequent rating downgrades would have undermined the recipient banks’ market access, but by September 2010 both Anglo and INBS were in wind-down (“gone concern”) mode. Nevertheless, they retained their banking license and satisfied regulatory capital minima, remaining eligible for ELA from the Central Bank.
Concluding remarks: practical difficulties Prompt, transparent over-capitalisation17 in a systemic crisis should remain the preferred option for dealing with failing banks that it is deemed necessary to save. Losses should be shared by both junior and senior creditors where necessary (unless the amounts involved are small) in cases where the banks are put into resolution.