Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

In the first instance, the word "direct" indicates that the ESM would provide money directly for banks without going through the sovereigns. If funding is channelled through the sovereign, it is indirect in nature. That is the significance of the use of the word "direct". If AIB is the example we are discussing, it must be stated it is a solvent bank which is trading profitably.

For the first half year it made €450 million or €460 million. Therefore, they do not need any more capital because they have sufficient core tier 1 capital and other forms of capital as well. Obviously, there is no suggestion of some kind of waterfall test applying because it is not a bank that is in trouble. The ESM would assess the suitability of direct recapitalisation for a bank like AIB and we will have to decide whether it was in our best interests to pursue it. We know from the initial discussions that it would not be a grant-in-aid but an exchange of AIB shares for money if the application were to succeed. We must decide, first, whether it is worthwhile doing it in monetary terms or can we realise more by a careful sale of AIB shares in tranches into the market over a period of time, and, second, we would have to assess whether we would be at a disadvantage if the major shareholder in one of our main banks was an institution in Luxembourg whose primary function was to raise money on the capital markets and act as a backstop for the euro. It is a Federal Reserve type of operation rather than primary banking. These are all considerations that must be taken into account.

The situation has changed dramatically. The Deputy used the word "game-changer". The statement made by Mrs. Merkel was actually a game-changer because the very statement itself improved our credit position. We can date our re-entry into markets from that statement. It was quite a significant statement and it had quite a significant impact. Now things have moved on. The Deputy quoted what I said on Sean O'Rourke's radio programme. I do not know whether I said that but I assume he is quoting me accurately. By the autumn of that year my primary concern was negotiating directly and remotely a deal on the promissory note. I said a lot of things which made sense in Frankfurt but they were not necessarily clear messages at home, but we succeeded in negotiating the promissory note deal as the year went by. I do not know the context in which I said that comment but if I said it I said it.