Tommy Broughan (Dublin North East, Independent)
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19. To ask the Minister for Finance if he expects a decision later this year on the retrospective recapitalisation of the main Irish banks under the ESM; and if he has projected the amount of capital that could be requested under this mechanism. [28364/14]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy is aware, the Euro-area Heads of State or Government (HoSG) agreed in June 2012 that "it is imperative to break the vicious circle between banks and sovereigns", and that when a Single Supervisory Mechanism, involving the ECB, is in place and operational, the European Stability Mechanism, the ESM, could recapitalize banks directly.

On 10 June 2014 the euro area Member States reached a preliminary agreement on the operational framework for the ESM's DRI. This includes a specific provision in relation to the retroactive application of the instrument. Therefore, the agreement, that we were active in negotiating, keeps open the possibility to apply to the European Stability Mechanism for a retrospective direct recapitalisation of the Irish banks, should we wish to avail of it.

 What is now required  is a decision by mutual agreement of the ESM Board of Governors to create a new ESM instrument in accordance with Article 19 of the ESM treaty and the aim is to have this process completed by November this year, subject to completion of national approval procedures.   This would allow the ESM DRI to come into effect once the Single Supervisory Mechanism is in place and operational which is expected to be in November of this year.

In relation to retrospective recapitalisation, the preliminary agreement states that the potential retroactive application of the instrument should be decided on a case-by-case basis and by mutual agreement. However, it will not be possible to make a formal application to the ESM for retrospective recapitalisation in advance of the Instrument being in place. The issue of the timing of any application has yet to be decided.  Similarly, the amount to be sought will be considered in the context of the overall application, and it would be premature, and indeed contrary to our interests, to identify an amount at this stage.

In conclusion, I should emphasise that both I and my Government colleagues continue to ensure that Ireland's case for retrospective direct recapitalisation is made at all levels as appropriate.