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Thursday 19 October 2017

Kenny insists deal on bank debt is not off the table

Fionnan Sheahan, Michael Brennan and Peter Flanagan

TAOISEACH Enda Kenny is insisting the Government is still pursuing a deal on our bank debt, despite growing indications the new EU bailout fund will not be made available for bank recapitalisation.

Financial markets were alarmed after the chair of the Eurogroup of finance ministers suggested the Cypriot deal should be a template for other bailouts. And the European Commission then confirmed it hopes the new European Stability Mechanism (ESM) fund will not be used for directly recapitalising banks.

The comments cast doubt on Ireland's hopes of getting a deal to claw back around €25bn of taxpayers' money tied up in the bailouts of AIB, Bank of Ireland and Permanent TSB.

A European Commission spokesman said that while work is continuing on the instrument, the body hopes "to be in a position" where the use of it won't be necessary. The spokesman added that "work on the instrument for the ESM which will allow for direct recapitalisation to be an option available to us continues."

The stance backs up comments, later retracted, by the chair of the eurozone finance ministers Jeroen Dijsselbloem, who questioned whether the ESM fund will ever be used to rescue banks directly. But Mr Kenny said the decision had been made by EU leaders in June last year to break the link between countries and bank debt.

"That decision has not changed and the mechanics of those discussions are now underway . . . to lead to single supervisory mechanisms and banking union. So our job here is to retrieve as much for the taxpayer as possible," he said.

Irish Independent

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