EXCLUDING Anglo Irish Bank from the September 2008 bank liability scheme would have “been something like a European Lehmans” according to Patrick Honohan, the governor of the Central Bank.

He was referring to the global financial crisis that followed the US authorities’ decision not to prevent the collapse of Lehman Brothers bank in September 2008.

Ireland “would not have been thanked by its European partners”, said Prof Honohan. The decison to prevent the bank’s collapse “is and has to be recognised” he said.

When asked on RTÉ’s Primetime whether he supported the guarantee, he said that he did not want to rehearse the arguments he expressed almost a year ago in his report, but that he had not changed his views since then.

On the interest rate on November’s EU-IMF deal, the governor said that he “found it high and that it was not a concessional rate”, but he believed that it could be reduced.

On the €10 billion recapitalisation of the banking system that was scheduled to take place by the end of February according to the terms of the EU-IMF bailout, Prof Honohan said the decision of the outgoing Government not to adhere to this condition was at first greeted in Europe with alarm. He described it as an important deadline.

He said he believed the €10 billion would be put into the banks, but that doing so after the election would ensure greater legimitacy and “buy-in” from the Irish public. His recommendation to the new government would be to do this before the end of the month and following the completion of stress tests on the banks.

Asked whether the additional capital needs of the banks would exceed €10 billion, he said that it might not be enough but he refused to rule out the figure. Unsolicited, the governor raised Alan Dukes’s public comments to the effect that the additional capital needs would exceed even a worst case scenario set out in the bailout of €35 billion. He said that he placed no “credence” on Mr Dukes’s view.

Prof Honohan said that there would be no “fire sale” of the banking system’s assets, a fear that was raised repeatedly in the election campaign.

He described the prospective incoming Government as “serious people” e prepared to continue to tackle the budgetary imbalance “with vigour”. He added that they will be obliged to do this in order to demonstrate to others in Europe who might be sceptical.

Asked about a possible default, Prof Honohan said this was not an attractive option for Irish society.