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Cranes stand above the unfinished Anglo Irish Bank that was to be the bank’s new headquarters in central Dublin, Nov. 23, 2010.Peter Morrison/The Associated Press

Ireland plans to liquidate failed Anglo Irish Bank as part of a deal it seeks with the European Central Bank (ECB) to ease its bank debt burden, a source familiar with the discussions said on Wednesday.

The ECB rejected Ireland's preferred solution to reschedule part of its bank bailout bill when its board discussed the plan for the first time last month, EU sources familiar with the talks told Reuters.

Irish central bank governor Patrick Honohan, the country's representative on the ECB's Governing Council, will put a revised plan to his fellow policy makers on Wednesday evening in Frankfurt, two sources said.

Under the plan Mr. Honohan will present, Anglo Irish Bank, now known as IBRC, will be liquidated so that the Irish government no longer has to make €3.1-billion ($4.2-billion U.S.) annual payments on a €28-billion ($38-billion) promissory note used to bail it out.

A source said legislation enabling the moves could come before the Irish parliament as early as tonight. If agreement is reached, Ireland's finance minister is expected to make a speech in parliament on the issue at around 2100 GMT, a source close to the talks said.

If Ireland gets ECB sign-off for the plan, most of IBRC's balance sheet will pass to the Central Bank of Ireland (CBI) when the infamous bank is liquidated, as the CBI enforces collateral used by IBRC to secure more than €40-billion of CBI funding, the source said.

Those assets will include a long-term Irish government bond which will be used to replace the current promissory note. A longer term bond will mean that Ireland can make the payments more gradually.

Ireland initially wanted the CBI to hold that instrument for a minimum of fifteen years. The ECB's governing council warned that such a long holding period would effectively be "monetary financing," which is prohibited by article 123 of the EU treaty. The 15-year clause is now being dropped, a second source told Reuters.

IBRC's remaining loans will be transferred to Nama (National Asset Management Agency), which will pay for them with Nama bonds, the source familiar with the discussions said.

A spokesman for Nama declined to comment.

The ECB declined to comment, beyond saying that talks are "ongoing." The Department of Finance also declined to comment. IBRC chief executive Mike Aynsley was travelling and unavailable for comment.

Ireland is desperate to avoid having to pay a politically incendiary €3.1-billion a year until 2023 to service the notes issued to underwrite Anglo and has been in talks for some 18 months.

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