Sunday 4 December 2016

Noonan dashes hopes for quick solution to debt mess

Published 22/10/2011 | 05:00

FINANCE Minister Michael Noonan yesterday dampened hopes of imminent progress in the euro debt crisis, warning that all the major issues were "inter-related" and would have to be resolved together in the "same solution".

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The comments came as Mr Noonan went into a crisis meeting of European finance ministers, where policymakers tackled the unholy trinity of Greece's woes, bank recapitalisation demands and ways to improve Europe's bailout fund.

He said Ireland would be watching developments on the bank recapitalisation side "with care", even though his "first take" was that Irish banks had enough capital to pass mooted Europe-wide stress tests.

How the banks fare will depend both on the pass mark set by the European authorities and on the kind of instruments that can be counted as high-quality capital.

Mr Noonan downplayed the chances of getting clarity on those issues from yesterday's meetings.

"It's all inter-related," he said. "The level of private-sector involvement in Greece has a kick back on the effect of bank recapitalisation."

French and German banks are particularly big holders of Greek sovereign debt and will be hard hit if the European authorities force extra, substantially higher, loss on Greek bondholders than the 20pc agreed in a July deal.

A big hit for those banks could lead to more lenient stress tests to ensure the gap that French and German banks have to make up isn't too big.

Irish banks have already been recapitalised by €24bn this year, and hit a target of 10.5pc of so-called 'core tier one' capital under an Irish round of stress tests. The mooted target for Europe is 9pc.

Mr Noonan said Irish banks had "the headroom necessary" to reach that 9pc.

Irish Independent

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