Monday 22 December 2014

Noonan clings to hope that ECB will still cut deal on Anglo debt

Published 07/12/2012 | 05:00

European Central Bank president Mario Draghi gestures during a news conference in Frankfurt yesterday where he again poured cold water on Irish hopes for some relief on the promissory notes for Anglo Irish Bank. Photo: Reuters

THE Government says talks aimed at securing relief on the €30bn cost of bailing out Anglo Irish Bank are still ongoing, despite the ECB's president appearing to rule out hopes of a better deal.

Mario Draghi's European Central Bank and the Government have been locked in talks on the issue for months.

Finance Minister Michael Noonan is desperate to change the terms of the Anglo rescue, which is set to cost the State €3.1bn a year in capital and interest payments.

He has already said that he does not want to make the next payment when it falls due in March. But skipping the deal without agreement from EU partners, including the ECB, would trigger a wider financial and political crisis.

However, Mr Draghi now appears to have ruled out any prospect of help to ease the terms of the Anglo debt. That debt is owed to the Irish Central Bank, part of the ECB system, so ECB support would be required if the burden was to be eased.

"The ECB cannot enter into any agreement viewed as monetary financing," Mr Draghi said yesterday. "Other than that, there is plenty of goodwill towards Ireland."

His comments were in response to questions on whether a deal could be done before the next €3.1bn bill for Anglo falls due in March.

Last night, a spokesman for Mr Noonan said the Government did not believe that an Anglo deal would involve "monetary financing" – the term for printing new money. Talks remain ongoing, he insisted.


Mr Draghi made his comments after Mr Noonan had said earlier in the day he was "pretty confident" that agreement on the issue would be reached in time to allow the State avoid making the €3.1bn payment in March.

Seamus Coffey, an economist at University College Cork, said: "What Mario Draghi seems to be saying is that if there is going to be a change on this, he wants someone else to do it."

However, Mr Coffey cautioned against taking any pronouncement as definitive, given previous changes of tack from senior EU officials over the course of the ongoing financial crisis.

There was some hope for Ireland when Mr Draghi left open the prospect of using the new European bailout fund to help meet the cost of the banking crisis.

Germany and other wealthy countries have tried to block use of the fund to deal with so-called 'legacy' issues dating back to before the fund was established in October. Mr Draghi said no one had yet defined "legacy debt" and until they did nothing specific had been ruled out.

Away from the Irish question, the ECB president painted a grim picture of the economic situation across Europe.

The latest ECB forecast is for continued weakness in the eurozone over the next six months, with any recovery now not anticipated until the second half of 2013.

Irish Independent

Promoted articles

Read More

Promoted articles

Editors Choice

Also in Business