Noonan signals Ireland unlikely to get EU help with bank debt
FINANCE Minister Michael Noonan has signalled major difficulties in securing a bank debt deal from the EU, admitting "things have changed dramatically" in Europe.
Ministers have been seeking the deal to shift some of the cost of saving Irish banks on to the European rescue fund since June 2012.
And despite growing doubts about Ireland's ability to secure the deal, he has remained bullish about pursuing EU help with the €40bn legacy bank debts, incurred when Irish taxpayers bailed out the system after its collapse in 2008.
But last night Mr Noonan admitted the real difficulties Ireland faces getting a bank debt deal from Europe, as it would need unanimous support from other countries in the EU. The State may actually claw back more taxpayers' money by selling bank shares on the open market, he said.
The Finance Minister said the Government will continue to base its compensation case on an EU leaders' summit declaration from summer 2012, acknowledging that Ireland needed bank debt help so it could sustain its overall debts.
That was when eurozone heads of government declared it was "imperative to break the vicious circle between banks and sovereigns" and called Ireland a "special case".
"But things have changed dramatically since 2012," Mr Noonan told the Oireachtas Finance Committee ahead of a meeting of ministers in Luxembourg today.
He said Ireland would need unanimous support from the other 27 EU member states to get this compensation.
But just this week, five countries – Spain, Italy, Portugal, Greece and Slovenia – were paying more interest than Ireland to raise money on international bond markets.
"It's very hard to convince ministers from countries like that that Ireland needs additional assistance to make our debt more sustainable, when markets have decided we're in a more sustainable position than they are themselves," Mr Noonan said.
The comments are the clearest signal yet that the Government is continuing to edge away from the prospect of securing the deal.
An unnamed senior eurozone source was this week quoted as saying it was "extremely unlikely" Ireland would get the "retroactive" deal from Europe's bailout pot, the European Stability Mechanism (ESM).
But Mr Noonan (pictured) still insisted that the country will make an application for retrospective compensation when the EU's new bank support system, the ESM, is finally up and running at the end of November.
Under pressure from Sinn Fein's finance spokesman Pearse Doherty, Mr Noonan insisted that Ireland would put in a compensation application.
He said the issue amounted to timing – and the Government would have to decide when it had best support from other EU states.
Mr Noonan also said it had been hoped to get some compensation by effectively selling Irish bank shares to the EU fund. But the position had changed there too, as Irish bank values improved.
He said that Bank of Ireland had already paid back €1bn more than taxpayers put in and the country now owed 14 pc of that bank.
"It doesn't make sense to give it away," he said.
Speaking about AIB, which is state-owned, Mr Noonan said taxpayers had put in €20bn and it was now independently valued at €11bn.
"So its value, as independently assessed, is half-way there," he said.
Mr Noonan said it might be better to sell the bank shares. "But that is not going to stop me filing an application," he added.