French finance minister shows support for Irish bank debt deal
Pierre Moscovici says any agreement between Ireland, the troika and ECB will 'suit us'
FRENCH Finance Minister Pierre Moscovici has thrown his weight behind Ireland's campaign to secure a deal on the country's crippling bank debt.
In a strong indication of support for Ireland's efforts, Mr Moscovici said that any deal struck between Ireland, the troika and the European Central Bank (ECB) would "suit us."
It comes ahead of a meeting of the "eurogroup" of eurozone finance ministers on Monday.
High on the agenda for that meeting is the question of how the eurozone bailout fund will be used to shoulder the cost of banking rescues in future.
A crucial part of Ireland's campaign for debt relief is pushing for part of the costs of our bank bailout to be retrospectively covered by the fund.
That would work by getting the European Stability Mechanism(ESM) to buy some of the so-called legacy bank assets currently in the hands of the Government.
On Monday ministers need to have a "political and principled" debate about the definition of "legacy assets," and the difference between retroactive support and legacy assets, a European official told reporters in Brussels yesterday.
Finance ministers are expected to come up with draft guidelines for future or retrospective bank bailouts.
One option being considered is for countries to keep 5pc to 15pc stakes in bailed-out banks so that risks are shared, according to the official in Brussels.
In Dublin, the French Socialist Party minister said he expected Ireland to exit the bailout this year.
"I trust that Ireland will be the first country to exit the assistance programme set up by the euro area and the IMF in the years of crisis, at the end of this year," Mr Moscovici said.
"And we will support fully, clearly, this perspective."
Mr Moscovici met with Finance Minister Michael Noonan and Public Expenditure Minister Brendan Howlin for an hour yesterday.
Ireland took over the rotating six-month EU presidency this month during which it hopes to strike the bank debt deal with the ECB and pave the way to exit its rescue programme on schedule at the end of this year.
Mr Moscovici emphasised that the deal struck last summer at the EU summit pledging to separate banking debt and sovereign debt should be followed through.
Mr Moscovici said he was fully briefed on Ireland's negotiations to cut the cost of bailing out Anglo Irish Bank with so-called promissory notes.
"Any kind of deal which can be reached with the troika and European Central Bank will suit us," he said.
However, agreement with the ECB on any changes to the punishing costs of the €31bn promissory notes used to bail out Anglo Irish Bank remains elusive.
Yesterday, ECB board member Benoit Coeure said any change cannot be seen to involve the bank "printing money" to make the problem go away by cancelling the debt.
"If the Irish Government wants to restructure, to change instruments of recapitalisation, that can be discussed," Mr Coeure said at a conference in Paris.
"But it needs to be done in respecting legal constraints, notably that the Central Bank of Ireland can't finance governments," he said.
Analysts at Scandinavian bank Nordea Markets said Ireland's successful return to bond markets means the country should soon be eligible for support from the ECB's new open market transactions (OMT) price supports.
If market conditions worsen, for example because of a shock elsewhere, the ECB could then buy Irish bonds "to show it means business".