Niall Collins (Limerick, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

To ask the Minister for Finance his views on when the ESM will be in a position to consider making direct investment in European banks; the discussions he has had with Irish banks to prepare for this eventuality; and if he will make a statement on the matter. [14056/13]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

On 29th June 2012 the Euro Area Heads of State or Government (HoSG) agreed that “... it is imperative to break the vicious circle between banks and sovereigns”. The same statement also made explicit reference Ireland, noting the need to further improve “the sustainability of the well-performing adjustment programme”. They also stated “when an effective single supervisory mechanism is established, involving the ECB, for banks in the euro area the ESM could, following a regular decision, have the possibility to recapitalize banks directly”. This commitment was reaffirmed by the European Council in December, which also mandated the completion of the operational framework for the European Stability Mechanism (ESM) direct banking recapitalisation facility in the first semester of 2013. Work is continuing at technical, senior official and Ministerial levels to complete work on the ESM’s direct banking recapitalisation facility by June of this year in accordance with the mandate of the European Council. Once this operational framework is agreed, it envisaged that national procedures to approve the instrument would be completed by December 2013. On this basis, it will be December 2013, at the earliest, before the ESM’s direct banking recapitalisation instrument is available.

Earlier this week, provisional agreement was reached between the Irish Presidency on behalf of the Council, the European Commission and the European Parliament on the Single Supervisory Mechanism (SSM). As I have noted above, the SSM will pave the way for the ESM to take on the direct recapitalisation of banks. Ireland’s position is that it is essential that the measures introduced for direct banking recapitalisation achieve the object of breaking the link between the sovereign and the banks – as agreed by the HoSG on 29th June last year and confirmed last December. On the question of whether I or my officials have had related discussions with the relevant Irish banks, as the instrument is still in the design phase such discussions would be premature at this juncture. Any such dialogue should ideally await the finalisation and approval of the instrument.