Business Irish

Tuesday 17 October 2017

New conditions to be applied for use of ESM for any bank debt deal

German Chancellor Angela Merkel
German Chancellor Angela Merkel

A list of new conditions would be attached if Ireland were to use the EU’s permanent bailout fund – the European Stability Mechanism (ESM) – as a tool for a bank debt deal.

Germany’s Bundestag budgetary affairs committee member Norbert Barthle, who is also a part of German Chancellor Angela Merkel’s CDU party, said Ireland could use the ESM to refund the State the cost of recapitalising the banks, however, he added it would be complicated.

The current bailout was agreed under the ESM’s predecessor, the European Financial Stability Facility (EFSF) and “therefore it would be difficult to change this programme into an ESM programme.”

He said it would be necessary to ask for a new programme “with new conditionality and directed into the future.”

There is widespread debate as to whether or not the ESM could be used to retrospectively recapitalise banks and his comments are the latest in a long line of conflicting views.

Taoiseach Enda Kenny said today, he would not use term like "second bailout" if the ESM were used to alleviate Ireland's bank debt.

Mr Kenny said that he had never envisaged a second bailout.

Yesterday the EU/IMF/ECB troika concluded its eighth review of Ireland’s €67.5bn bailout programme progress.

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