MINISTER FOR Finance Michael Noonan said an EU deal to restructure Ireland’s bank debt was unlikely before a €3.1 billion payment falls due this month but he left open the possibility of delaying the payment.
Arriving in Brussels for regular talks with his euro zone counterparts, Mr Noonan said the approval of the second Greek bailout would free the EU-European Central Bank-International Monetary Fund “troika” to devote more time to the Irish bank question.
Dublin has been trying for months to renegotiate an EU-approved arrangement under which it is recapitalising the former Anglo Irish Bank and the former Irish Nationwide Building Society with expensive IOUs known as promissory notes.
A key consideration in this debate, said a senior European official, is whether any deal would help Ireland realise fiscal targets set under its EU-IMF bailout in a scenario in which economic growth is forecast to slow down.
Also in question is whether loss-incurring tracker-mortgages issued by other Irish banks could be moved as part of any restructuring deal to Irish Bank Resolution Corporation, as the former Anglo and Irish Nationwide are now known.
With no breakthrough imminent, however, attention in Dublin turned in recent days to a postponement of the €3.1 billion bill due at the end of this month.
The ECB is resisting any delay and certain euro zone officials believe it is “wishful thinking” on the Government’s part to think other countries would endorse the notion.
However, Mr Noonan said nothing was ruled in or out at this point when asked if it was inevitable that the Government would pay the €3.1 billion on time. “It’s a long way to the end of March,” he said.
Asked whether that meant he still held out the prospect of a delay, the Minister said: “I didn’t say that at all. We’re in a negotiating position and we’re not excluding anything or committing to anything at this stage.” He insisted the Government was making progress in its campaign and was determined to see the matter through to its conclusion.
“People in the troika were very preoccupied with Greece so they’re free now to give more attention to what we want,” he said. “What commenced as an Irish request – an Irish ask – is now being converted into a European and an IMF policy paper. And when that policy paper is completed, we will be looking for political support because, in the final analysis, it will be a political decision which will decide whether there is a new arrangement to replace the promissory note.
“But I think there’s general agreement that the promissory note as drafted was a pretty bad arrangement – and a very expensive arrangement for Ireland – and that alternatives can be put in place. So all the issues of how a new arrangement might impact on the wider banking industry immediately and in years to come and the payment dates is all part of the negotiation.”
