Enda Kenny (Mayo, Fine Gael) | Oireachtas source

We have taken a number of steps to achieve this. We recapitalised and restructured the banks, we liquidated the IBRC and we replaced the promissory notes used for recapitalisation with long-term bonds in order to dramatically reduce our own market funding requirements. Those steps have had the effect of stabilising the financial system and reversing the outflow of deposits and other funds that damaged our economy. Deputy Martin is aware that yields are currently at their lowest level in our history. In addition, in 2011 we secured an interest rate reduction in the EFSM and EFSF loans under the programme. In April last year we reached agreement with the 28 countries and eurozone partners to extend the average maturity of the EFSM and EFSF loans by a further seven years. Last December, we exited the programme and, more recently, we secured agreement on the early repayment of a significant portion of our IMF loans, resulting in total interest savings of approximately €1.5 billion. We got approval from all our colleagues in respect of that. It is testament to the resilience of the Irish people and the loyal support of our EU partners that Ireland has been able to return to the markets in a sustainable way, having delivered on all of our commitments in the last three years. However, work remains to be done.

In June 2012, the euro area Heads of State and Government resolved to create a banking union to break the vicious circle between banks and sovereigns, and committed to examining the situation of the Irish financial sector, which was named specifically in that decision. The precondition laid down at that time was for the possible use of the ESM to recapitalise banks directly, with the establishment of a single supervisory mechanism, SSM, for the European banking sector. That legislation was agreed by the Council and the European Parliament during the Irish Presidency of the Council of the European Union last year, and the SSM became operational on 4 November. On 10 June 2014, euro area members reached a preliminary agreement on the operational programme and framework for the ESM's direct recapitalisation instrument. That included a specific provision to keep open the possibility of applying to the ESM for retrospective direct recapitalisation of banks by mutual agreement. This would require unanimous endorsement by the board of directors. An application can only be made when the mechanism enters into force. As a precondition for this, the SSM is now in place and is operational. Another precondition is the completion of national approval procedures for the direct recapitalisation instrument. Our procedures are in place with the enactment of the ESM Amendment Order Act 2014.

Once all member states have completed national approval procedures, the ESM could agree to implement the direct recapitalisation instrument. That could happen as early as this month. It is an issue that the Ministers for Finance will address. The Minister for Finance, Deputy Noonan, has referred to this issue. Clearly, the objective is to get the best possible result for the Irish taxpayer, and the question of keeping open the application for direct recapitalisation still stands.

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