Brian Cowen (Laois-Offaly, Fianna Fail)

What was agreed in discussions on our position in the aftermath of the Lisbon treaty at the October meeting was that we would outline a progress report. The conclusion of that meeting was that we would work with the institutions and with other member states to see if we can address the concerns that arose out of the research we conducted. We can then chart a way forward from there. That process of engagement continues with the institutions and with the Presidency. We undertook to come back in December to see what progress has been made and to set out a road map.

Some of the issues concerning them relate to other institutional matters, such as the basis under the which the European elections will be held in June. They need to get clarification about that, and we need to get clarification about what they can do to assuage the concerns that arose on various matters. I will outline in detail in my statements on the Council what those specifics were.

The eurozone meeting was called in an effort to co-ordinate a response at that level. We had already made our move prior to that, in our own national interest. We had been in touch with the competition Commissioner to ensure that we were in compliance with EU state aid and competition rules. The confirmation of compliance arose upon our return from that meeting late that night. Various opinions were put forward on the statement that was to be made. It is not mandatory that Ireland had to capitalise its banks. Chancellor Merkel made it clear at the meeting that we were talking about a political declaration and a toolkit as to what countries may use in an effort to show co-ordination and ensure that we can demonstrate to markets and the wider public that the EU has a broad strategy that is common to all.

The important point to make concerning that matter, which exceptionalises Ireland in one sense, is that we made a guarantee in respect of all assets and liabilities prior to this co-ordination mechanism being agreed at that meeting. There are others whose response to it is a partial guarantee plus partial capitalisation. Some of the recapitalisation requirement arises in certain countries because of the fact that some other syndicated loans relate to taking on the risks of the US sub-prime market, which is not a characteristic of Irish banks' portfolios. In those respects, therefore, the requirement for recapitalisation does not arise on the basis that the value of that paper is little or nothing. People would have to mark down pretty quickly if they had that sort of portfolio in their banking system, which we do not.

It is important to remember that because others are recapitalising, it does not mean there is a requirement on us or that we are mandated to do so. We have made the point clearly from day one, as regards the decisions we took given what we were faced with, that one of the ideas was to reduce to the greatest extent possible the exposure of the taxpayer to risk. There is far less risk to the taxpayer in respect of the State guarantee scheme we devised than would be the case were one to make a direct investment in a bank whose capital ratios were decreasing. We have not said that this will never be considered, but we have refused to speculate on it because it is not helpful.

I believe strongly that the taxpayer should be the last resort, not the first resort, in respect of providing further capital, if necessary, to institutions if they require it. There are a number of options to be considered by such institutions before the taxpayer would be asked to provide the necessary recapitalisation. Those would have to be investigated, assessed and examined. The State guarantee scheme has provided a greater degree of time and space to consider those issues, rather than following headlong along a road that others felt necessary for their given set of circumstances, which are not necessarily our requirements at this time.

That would be a more accurate indication of the Government's position, which has been our position from the outset — that the issue of recapitalisation may or may not arise in the future and may or may not require Irish taxpayers' support in future. However, there are many options that need to be examined before that would be given full approval or consideration.

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