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Negotiations on bank debt deal 'best done in private' - Hayes

Finance Minister Michael Noonan will meet with his counterparts in Brussels next week to lay out Ireland’s case for reducing the burden of Ireland’s bank debt.

Michael Noonan and Brian Hayes
Michael Noonan and Brian Hayes
Image: Laura Hutton/Photocall Ireland

A GOVERNMENT MINISTER has said that negotiations on a deal to reduce the burden of Ireland’s bank debt are “best done in private”.

Brian Hayes, the junior finance minister, was speaking amid reports that the government will look to get a deal on reducing its bank debt by the end of October.

Hayes acknowledged that this was important in light of negotiations with the Troika as the country needed to be in a position to state how it plans to fund itself over the following 12 months.

He told RTÉ Radio that following an agreement in principle among EU leaders last week to bailout Spain’s troubled banks directly from the European Stability Mechanism it was expected there would be a deal retrospectively on Ireland’s bank debt.

“We’ve made it absolutely clear following the breakthrough last week that the issue is now firmly within the eurozone finance ministers,” he told Morning Ireland.

Finance Minister Michael Noonan is due to meet with his EU counterparts next Monday in Brussels where the Irish Times reports that he will outline his interpretation of the deal agreed last week that bank debt should be separated from sovereign debt.

The €63 billion effectively poured into Ireland’s troubled banking sector has been placed on the country’s sovereign debt which effects its borrowing rate and overall financial health.

Transferring the debt away from the sovereign would have the effect of bolstering Ireland’s hopes of returning to normal lending markets next year. It appears unlikely that 100 per cent of the debt will be transferred but some reports indicate that around half of it might be.

Hayes said that “negotiations are best done in private” but said that the government was “not putting figures on it” adding: “We have been working up different options… the hard work starts now”.

Fianna Fáil’s Timmy Dooley told the same programme that it was “now up to the Irish government to put a very strong case on the basis of equal treatment” saying that the same deal done for Spain should also be applied to Ireland.

Asked if this meant a full reimbursement of the €63 billion that had been poured into Ireland’s banks, Dooley said it was the “least we would expect”.

“I think that’s the obvious follow through from separation of bank recapitalisation from the sovereign which now appears is going to apply to Spain and every country that follows hereafter,” he said.

Also speaking to RTÉ Radio this morning, the economist Colm McCarthy said that the issue of negotiations over Ireland’s bank debt was “not a diplomatic problem, it’s a financial problem.”

While not stating any particular amounts as to how much of Ireland’s debt could be transferred away from the sovereign he said that anything of the order of €5 billion or €10 billion would not be sufficient.

McCarthy said that any deal would have to be “sufficiently effective to restore the solvency of Irish state”.

Read: Government to focus on ‘fleshing out’ EU debt deal

Explainer: What did the EU leaders agree in Brussels?

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Hugh O'Connell

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