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Friday 1 December 2023 Dublin: 2°C
Sam Boal/Photocall Ireland Michael Noonan

If Michael Noonan is going to get a bank debt deal this is how he says he'll do it

The Finance Minister has outlined his strategy for securing retrospective recapitalisation of Ireland’s banks.

FINANCE MINISTER MICHAEL Noonan has said that any application for retrospective recapitalisation of Ireland’s two pillar banks will be a matter of timing.

However, the minister has again signalled that Ireland may not pursue an application to the eurozone’s permanent bailout fund as there are other options to recover taxpayers’ money pumped into Bank of Ireland and AIB.

Noonan said in an answer to a recent parliamentary question from Fine Gael backbencher Brendan Griffin that pursuing a bank debt deal remains “on the table” but much will depend on “timing”.

For over two years the Irish government has been pushing for the use of the European Stability Mechanism (ESM) to retrospectively recapitalise AIB and Bank of Ireland, which received some €25 billion in State funding at the height of the financial crisis. The lack of progress on a deal has been heavily criticised by opposition parties.

Noonan said that applying to the permanent bailout fund, the European Stability Mechnaism (ESM), is contingent on the direct recapitalisation instrument (DRI) being in place.

There will be further progress on this tomorrow when the European Central Bank formally takes over supervisory powers from the Central Bank of Ireland. This means it will regulate Irish banks with a single set of banking rules applied to the 18 countries who use the euro.

Noonan said that once the Single Supervisory Mechanism (SSM) is established and the recapitalisation instrument is in place Ireland would be able to make a formal application for retrospective recapitalisation of its banks.

The minister said DRI’s operational framework “keeps open the possibility to apply to the European Stability Mechanism for a retrospective direct recapitalisation of the Irish banks, should we wish to avail of it”.

However he added that retrospective recapitalisation is “not the only option open to us to recover the money provided to recapitalise our banks”, saying: “Investors are now willing to invest in Irish banks again and the market value of our investments has improved accordingly.”

However if there is to be an application, it is “a matter of timing”, Noonan said, giving no hint as to when any application might take place.

He added: “I believe that in Europe a strategic approach tends to deliver and I therefore intend to keep the option of a retroactive recapitalisation on the table with the timing of any application to be decided in due course.”

Read: Angela Merkel’s ‘Dr No’ makes Ireland’s search for a bank debt deal much harder

Read: ‘We need to know what the strategy is’: FF urges government to push for debt deal

Read: Noonan says bank debt deal cannot be ‘actively’ pursued until 2015

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