The Finance Minister is facing criticism after he admitted that junior Anglo bondholders may face a €280 million payout.

Michael Noonan has been accused of a "U-Turn" after admitting the payments could go ahead - despite previously insisting they were unlikely.

Mr Noonan told the Dáil yesterday: “Should the junior bondholders submit a claim and it be found to be valid, then they will legally be entitled to a dividend provided there are sufficient funds available."

The payout of €280 million comes just as the water charges are imposed.

The Department of Finance have since responded to the criticism by stating: "There is no U turn in government policy in relation to the IBRC liquidation."

"It is important to differentiate between unsecured creditors and subordinated/junior bondholders. Unsecured creditors rank ahead of subordinated bondholders. If there is a sufficient surplus, the unsecured creditors, of which the Irish State makes up approximately 70%, would get paid in full before the question of any funds for lower ranking creditors."