Rehn says banks must be saved as talks intensify
EU commissioner calls for 'reorganisation and restructuring' to make embattled sector viable
EU economic affairs commissioner Olli Rehn said yesterday that Irish banks must be saved but the task won't be easy.
"The Irish banking sector has to be made viable and sustainable," Mr Rehn said after finance ministers ended their monthly meeting in Brussels yesterday.
It "will require quite some reorganisation and restructuring", he added.
Mr Rehn, who was in Dublin last week for talks with the Government and opposition parties, told a news conference in Brussels yesterday that the talks, which had begun "at the weekend" would now intensify and 'move to Dublin.
Finance Minister Brian Lenihan had "committed" to work with the European Commission, the European Central Bank and the International Monetary Fund, Mr Rehn said.
"This work will now intensify" in an effort "to determine the best way to address any possible support required" to cover Ireland's banking sector, he added.
The Finnish politician spelt out that additional funds for any bailout might have to come from sources other than the European Central Bank.
"I am quite confident that it will be very difficult for the ECB to go further than now in the providing of liquidity to some banks in the member states," he said.
There was continuing uncertainty over where the money might come from and whether countries outside the eurozone, such as Britain, would take part in any bailout.
Despite these worries, Klaus Regling, who runs the European Financial Stability Facility (EFSF), said his organisation was ready to help Ireland. The EFSF, which is the eurozone's portion of the €750bn financial backstop, would issue bonds backed by eurozone governments within days.
"If one of our shareholders requests financial support, then the EFSF would be able to go to the markets very quickly," Mr Regling said.
After that, it would take five to eight working days to raise the money, he added.
European Commission President Jose Barroso said Ireland's banking crisis must be addressed speedily and confidently.
"We need to assess the situation," Mr Barroso told reporters yesterday in Brussels after experts from the European Union and International Monetary Fund were dispatched to Dublin to begin looking into the books of Ireland's debt-laden banks.
"Let's assess the situation before we jump to conclusions."
Mr Barroso said Ireland's goal to cut its budget deficit to below the EU limit of 3pc of gross domestic product by 2014 was "firm and credible." He said he was "fully confident" in Ireland's four-year fiscal plan.
In Washington, White House press secretary Robert Gibbs said US officials "continue to believe, as we did with Greece, that Europe has the ability to deal with the crisis in Ireland and possibly in other countries".
Underlining the importance of a decision on Ireland for the banking sector in the wider eurozone, Josef Ackermann, the chief executive of Deutsche Bank, also attended yesterday's meeting of finance ministers.
"A breakout of any state on the markets right now would lead to contagion and we want to avoid this with all means," Mr Ackermann said.
"We have to do everything to catch every country that runs into trouble."