Written answers

Tuesday, 16 April 2013

Department of Finance

Banks Recapitalisation

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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To ask the Minister for Finance if he shares the view of the European Commission, from a statement by its spokesperson on 26 March 2013, that the European Stability Mechanism, to which he has already contributed €509m, will not be used to recapitalize banks. [16364/13]

Photo of Michael NoonanMichael Noonan (Minister, Department of Finance; Limerick City, Fine Gael)
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As the Deputy will be aware, the European Council in October 2012 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.” The Taoiseach and Chancellor Merkel spoke together following the October 2012 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 Government is still heavily involved in drawing up the 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. Ireland continues to be fully engaged in this process within the Eurogroup and among Heads of State or Government. Furthermore, officials from my Department and the NTMA also attend technical meetings with the ESM and other member states. Discussions remain on-going in relation to this issue and no conclusion has been reached. Notwithstanding these discussions, the Government will also continue to explore any market opportunities for our remaining banking assets, to get a return of any of the sums used to bail out the banks.

Despite recent media reports, the Government’s policy and view in relation to ESM has not changed and we will continue to engage with other Member States to design the ESM Direct Bank Recap facility, in order to have a sufficient instrument operating with the capability of breaking the vicious circle between banks and sovereigns.

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