Kenny making fresh bid for deal on bank debt
Taoiseach Enda Kenny will go back to EU leaders with proposals to reduce bank debt that were rejected in the past year.
The Coalition is hoping to piggy-back on a possible rescue deal in Spain, where the banking crisis is escalating.
After passing the EU fiscal treaty referendum, the Government is pushing hard for an agreement to reduce the burden on the taxpayer from the rescue of the banks.
Tanaiste Eamon Gilmore said yesterday the Government would be lobbying to "re-engineer" the cost of bailing out the country's banks.
"We have to get a deal on our bank debt," he said. "From the time that the present government was formed 15 months ago we set out on a strategy to negotiate that deal. We've had some success," he added.
Aside from the resounding Yes vote in the referendum, the deteriorating situation in Spain means there is growing speculation the rules on rescue packages will change, with bailout funds likely to go directly to banks.
A bank-debt deal would reduce the burden of the €64bn already pumped into the banking system, especially the €30bn of loans for Anglo Irish Bank.
Taking out the €21bn provided from the National Pension Reserve Fund, the remaining €43bn could be shifted from being state debt to the books of the banks. The Government has twice attempted get support on measures to help the banking sector and reduce the taxpayers' repayments of banking debt.
Mr Kenny will be returning to EU chiefs with a repackaging of these plans, which were rejected last time around.
The deal the Government wants includes reducing the amount by shrinking and pushing out the repayment of bank debt and securing cash flow for banks on a longer-term basis.
The Taoiseach floated the idea of pushing out the annual €3bn repayment on Anglo Irish Bank at the start of this year, but didn't table it formally.
It came after the complete failure of an attempt last year to secure longer-term cash flow for the banking system from the European Central Bank.
The Government still wants the EU to provide billions to the banks for up to five years.
Last year, Mr Kenny naively brought up this issue of medium-term liquidity, but his request was ignored.
Transport Minister Leo Varadkar said the Government didn't know what is going to happen in Spain.
"What we do know is that there is a long-standing precedent in Europe that if a country down the line gets a better arrangement than one that had an arrangement prior to that, that that country gets retrospectively treated fairly."