Updated 6.35pm

GERMAN CHANCELLOR ANGELA Merkel has indicated that Ireland could still get a deal to retrospectively recapitalise its banking system, saying “we’re not at the end of the road yet”.

Speaking at a joint-press conference with the Taoiseach Enda Kenny at Government Buildings this afternoon, Merkel said that it was important to pay tribute to the success of Ireland and work closely on financial issues.

Following a meeting with Kenny and the Tánaiste Eamon Gilmore, she said there still needed to be talks on the establishment of the single supervisory mechanism as part of EU-wide banking union and setting up the “necessary rules for recapitalisation”

She said these issues are “currently in the consultation process”.

“I have a positive outlook on the possible outcome. We have achieved much, but we’re not at the end of the road yet,” she added.

The German flag flies over Government Buildings in Dublin today ahead of Angela Merkel’s visit. Pic: Sam Boal/Photocall Ireland

Merkel was quick to heap praise on Ireland, describing it as a “tremendous success story” and said she had “respect and admiration for what you have been able to achieve”.

“This is thanks to the people of Ireland who were able to embark on this very difficult course,” she said.

Kenny echoed Merkel, saying that until the single supervisory mechanism and Banking Union are fully established then progress on a debt deal cannot be made. He said when that does happen it will be on a “case-by-case” basis.

“Nothing can be done about it until the single supervisory mechanism is put in place,” he said. “The Chancellor is hopeful that there will be a good result.”

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