Ireland's finance minister tries to calm fears over Anglo Irish Bank

After "constructive" talks with the EU competition commissioner Joaquín Almunia today he heads into a conference of European finance ministers tomorrow aware that Ireland's financial system has come under intense scrutiny from the financial markets.

In a rare interview on the subject of the bank, Lenihan said he was confident that the €25bn (£21bn) already pumped into the bank could be absorbed by the public purse.

"Yes, the costs are annoying, infuriating, but they are manageable," Lenihan told the national broadcaster RTÉ before flying to Brussels.

The minister also spoke about the cancer that has prevented him from taking on a more public role, saying treatment had stopped in June and he was not in any "present danger".

The future of Anglo Irish has dominated the news agenda in Ireland for the past two weeks, culminating in the revelation last week that the bank lost more than €8bn in the first six months of the year. There have been increasing fears that the Irish economy cannot withstand such huge debts.

Credit default swaps on Irish government debt, which measure the cost of insuring the bonds against default, have risen in the past fortnight after the country was downgraded by the ratings agency Standard & Poor's. S&P cut Ireland's long-term rating by one notch to AA- on fears of a far higher bill for supporting the banking sector and assigned a negative outlook, meaning another cut is more likely than not in the next one or two years.

But Lenihan insisted that the one-time Celtic Tiger would not be broken by the bank. "I was a bit concerned at the suggestion that a lot of public opinion believe that Anglo Irish will bankrupt the country," he said. "That's simply not the case."

He said there were no "magic" solutions and if people wanted a quick fix – such as closing the bank – the country's economy would be frozen for years to come.

The government's proposals for restructuring the bank have been with the EU for some time and Brussels is due to make its decision in the next two or three weeks.

One option, favoured by the bank's management, is the creation of a good bank and a bad bank to carry all the impaired property loans. The other, which Lenihan hinted was the preferred option, was to wind it down over 10-12 years. He denied that the markets did not have confidence in the government's ability to repay its debt and said they were simply looking for certainty over the future of Anglo.

He said there were no easy fixes with "the size of the bust in Ireland".

"We will not be distracted by those who suggest that there is some kind of quick fix where you can bust the country and magically stage a resurrection," he said.

"There is no economy in the world that has done that. It has been tried in various Latin American countries and it has led to a deep freeze for a long number of years in any country where it was attempted."