Dr. Donal Donovan:

Certainly the ECB would very strongly take the view that it does not matter who owns the banks, but what matters is the creditworthiness of the collateral with which it is provided in respect of the loans it makes. As Professor McHale has said, one would not see any reason in itself for that to be affected necessarily. If the ESM were to take a stake in the bank some people might think the bank would be run better than it is now. Who knows? That is for consideration. That might improve profitability and generally make the bank somewhat more attractive. That is one hypothesis. That might indirectly lead to lower cost of additional capital, which could be needed down the road depending on stress tests, results and so on.

Alternatively if the bank wanted to float some bonds to get some funding perhaps the existence of the ESM, in that sense, could make people believe this is a better bank. That is a pure hypothesis. One has no idea as yet - it is one of the complications associated with this ESM scheme - what it means for the ESM to have a stake in a bank. Does it mean somebody will be sitting on the board or coming every day or every month to Dublin to see how the bank is running? It is quite a big issue, particularly for the Germans, who have reservations about this proposal. They cannot quite see how this would work.