Mary Lou McDonald (Dublin Central, Sinn Fein)
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To ask the Minister for Finance when he will next be raising the issue of legacy debt in the Pillar Banks with his counterparts in Germany, Finland and the Netherlands and if his recent comments on the issue of the ESM's capacity to run banks at the Joint Finance Committee dealing with the forthcoming Ecofin meetings represents a shift in position away from seeking ESM funds to retrospectively recapitalise pillar banks. [50517/12]

Michael Noonan (Limerick City, Fine Gael)
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The European Council in October reaffirmed that "the Eurogroup will draw up the exact operational criteria that will guide direct bank recapitalisations by the European Stability Mechanism (ESM), in full respect of the 29 June 2012 euro area Summit statement. It is imperative to break the vicious circle between banks and sovereigns." As the Deputy will be aware, the Taoiseach and Chancellor Merkel spoke together following the October European Council and discussed the unique circumstances behind Ireland’s banking and sovereign debt crisis, and Ireland’s plans for a full return to the markets. They reaffirmed the commitment from June 29th to task the Eurogroup to examine the situation of the Irish financial sector with a view to further improving the sustainability of the well performing adjustment programme. They recognised, in this context, that Ireland is a special case, and that the Eurogroup will take that into account. The Taoiseach also had a good discussion of these issues with President Hollande on 22 October.

When my colleague, Minister for Public Expenditure and Reform, Brendan Howlin, and I met with German Federal Minister for Finance, Dr. Wolfgang Schäuble, on 29 October in Dublin, this was also discussed, with Minister Schäuble publicly echoing his support for the communiqué issued by the Taoiseach and Chancellor Merkel.

I also had the opportunity to meet the incoming Minister for Finance of the Netherlands at this week’s Ecofin meeting.

With regard to my comments at the Joint Finance Committee in relation to the ESM, the fund is to be given the capability of recapitalising banks directly. However the primary decision that was made at the meeting on June 29 was for banking union, which will involve the establishment of an effective Single Supervisory Mechanism across the Euro area.

The establishment of this new supervisory mechanism is a prerequisite for direct banking recapitalisation, and so it has become obvious that reaching an outcome here will take longer than our discussions in relation to the promissory notes. Aside from the issue of when this new instrument will become available, there is a host of other issues that have yet to be worked through such as how the ESM would run these banks, what governance arrangements would be put in place between the fund and the banks themselves and indeed between the ESM and Member State governments. We need to consider these wider considerations in the months ahead and this is what I was referring to at the recent Finance Committee.