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Jeroen Dijsselbloem has only been Eurogroup president for two months - but has already overseen massive changes in how the continent handles Eurozone bailouts. Virginia Mayo/AP

Update: Eurozone head insists Cyprus deal not template for future bailouts

Jeroen Dijsselbloem had earlier said the Cyprus template – where depositors and bondholders are hit before governments – is the new model for how troubled banks will be handled. He has since clarified the remarks.

Updated 6.35pm

THE HEAD of the group of Eurozone finance ministers has moved to clarify earlier comments in which he suggested that the unprecedented bailout model used in Cyprus is now a model to be used in other countries.

The terms of the Cypriot deal, which will see account holders in troubled banks asked to pay a levy in order to save them, have caused considerable controversy.

Earlier comments from Jeroen Dijsselbloem were considered to have damaged Ireland’s hopes of seeking help from the Eurozone’s bailout fund, the European Stability Mechanism (ESM), in recovering the costs of its banking bailout.

But Dijsselbloem’s has now insisted in a brief statement issued tonight that Cyprus “is a specific case with exceptional challenges which required the bail-in measures we have agreed upon”.

He said: “Macro-economic adjustment programmes are tailor-made to the situation of the country concerned and no models or templates are used.”

Earlier, the Dutch finance minister told Reuters that he favoured exploiting a bank’s own creditors to try and recapitalise a bank before asking its national government for help. The end product of this, he said, was that the ESM should never be used at all.

He told Reuters reporter Luke Baker:

Strengthen your banks, fix your balance sheets and realise that if a bank gets in trouble, the response will no longer automatically be that we’ll come and take away your problem. We’re going to push them back. That’s the first response we need. Push them back. You deal with them.
If there is a risk in a bank, our first question should be ‘Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?’. If the bank can’t do it, then we’ll talk to the shareholders and the bondholders, we’ll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders.

Ireland has been lobbying to use the ESM to retrospectively recapitalise banks which it bailed-out at the height of the financial crisis with over €25 billion poured into AIB and Bank of Ireland, the State’s two pillar banks.

Prior to Dijsselbloem’s clarification, the Department of Finance said that it would continue to work with Europe to “avail of the new recapitalisation tools that are being developed”.

In response to a query from, a statement said: “Progress is being made in this regard with the provisional agreement last week between the  Council and the EU Parliament on  Single Supervisor –  the core element of banking union and a vital step in breaking the vicious link between the banks and the sovereigns.”

Dijsselbloem’s earlier comments to Reuters caused global markets to slide, and saw the euro fall in value against the dollar amid fears it could precipitate the start of a major withdrawal of cash from Eurozone banks.

- additional reporting from Hugh O’Connell

In full: Jeroen Dijsselbloem’s full interview with Reuters

Read: Cyprus reaches last minute deal to avoid bankruptcy

Explainer: Your 25-point crash course on what’s happening in Cyprus

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