EU governments to call shots on bailout - Trichet
ECB chief refuses to be drawn on renegotiation as Kenny meets European heavyweights
EUROPEAN Central Bank chief Jean Claude Trichet yesterday refused to lend his support to Ireland's battle for a lower interest rate on the bailout deal, insisting any decision was "up to the governments" of Europe.
The ECB boss also hinted that the incoming government would not get much leeway to deviate from the €10bn capital injection that was due to go into the banks at the end of February.
But there was some positive news for Irish banks, too, as the ECB agreed to maintain its exceptional liquidity support, including unlimited auctions of cheap 90-day money, over the medium term, easing fears the bank was preparing to turn off the tap.
The comments come as Enda Kenny meets European political heavyweights in Helsinki this morning -- the first step in the long road to renegotiating the terms of Ireland's bailout.
European Commission economics chief Olli Rehn has previously hinted his support for a lowering of the bailout's 5.8pc rate, in the interests of "debt sustainability" in Ireland and other countries borrowing from Europe's bailout fund.
But German premier Angela Merkel dented hopes of a lower rate earlier in the week when she said both Ireland and Greece should have to stick to the terms they originally agreed.
Asked whether the ECB would support Ireland's efforts to have the bailout interest rate lowered, Mr Trichet yesterday said the interest rate was "a question ...[for]... the executive branches that are delivering the loans".
"I will not say anything at this stage," he added. "It is up to the governments to see what they would like to do on this."
Mr Trichet also refused to be drawn on comments from Ireland's Central Bank Governor Patrick Honohan, who told RTE's 'Prime Time' there was "alarm" in the ECB when the outgoing Government deferred February's €10bn injection of capital into the banks.
However, Mr Trichet hinted there would not be much further flexibility on the injection of the cash.
"On the €10bn, for us the [agreed rescue] plan is the plan," he stressed.
Prof Honohan also told 'Prime Time' that the ECB had agreed there would be "no fire-sales" of Irish banking assets as part of the bailout plan, dampening previous speculation the ECB wanted a massive sell-off so Irish banks could repay the €145bn of cash they owe the eurosystem.
Asked whether the commitment to no firesales meant that the ECB accepted Irish banks would continue to have high amounts of ECB cash for an extended period, Mr Trichet stressed that this was dealt with in the plan.
The ECB also confirmed yesterday that it would continue offering banks unlimited amounts of 90-day money until June 29 at the earliest, and that the weekly ECB auctions would also continue to offer unlimited cash.
Mr Trichet has commented frequently on the need to wean "addicted" banks off ECB support. "If and when we have a plan [to deal with addicted banks] we will announce it," he said yesterday.