State makes bank commitment to bailout troika
THE Government has given a fresh commitment to notify the bailout troika within 14 days of any signs that the banks are falling behind schedule in their €70bn deleveraging project, it emerged last night.
The troika's additional oversight of the deleveraging process was revealed in the latest 'Memorandum of Understanding' (MOU) for the €85bn bailout deal with the European Commission, European Central Bank and International Monetary Fund.
The document also shows that the troika has gotten additional commitments in several other areas of banking policy, including monitoring the funding ratios of banks and getting a "comprehensive report" on financial supervision progress.
Finance Minister Michael Noonan admitted the troika had been "anxious" that the banks' deleveraging project wouldn't fall behind schedule when they came to Dublin in June for a review of the programme.
Last night's MOU shows that anxiety has triggered a commitment that the troika will be informed within 14 days if "actual or forecast asset disposals fail to meet the interim targets" when they're audited every six months.
"In addition to providing the six-monthly report, the Irish authorities will update the EC, the IMF and the ECB on progress in the intervening quarters," the document adds.
No such references were included in the previous version of the MOU.
The Irish authorities are also mandated to "monitor closely" the evolution of the banks' funding ratios "in consultation with" the troika.
The latest instalment commits Ireland to presenting a "comprehensive report on progress in implementing the Central Bank's action plan for strengthening supervision of credit institutions", and also to "discuss" the plan with the troika.
The June MOU also confirms that some €500m of Bank of Ireland's end July recapitalisation has been deferred indefinitely to allow the bank to seek gains from its €600m of outstanding junior bonds.
Irish Life & Permanent has also been given a derogation for €1.1bn, which is to be raised through bond buy-backs, and the sale of its life insurance business.
No deadline has been given for raising the cash.