Further blow to hopes of bank debt recapitalisation

Ireland’s chances of convincing EU leaders to recapitalise the €32bn bank debt decreased even further last night as finance ministers said they will cap the amount of the EU’s rescue fund that goes towards banks at around €40bn.

Finance Minister Michael Noonan, on his way into the meeting of eurozone ministers, played down the issue, saying he hoped the Government would resolve many of the legacy problems it inherited by the end of its mandate in 2016.

The ministers had their first discussion on how the European Stability Mechanism — the EU’s rescue fund — would break the link between the taxpayer and the privately owned banks. One of their decisions was that they would put a ceiling on the amount of the fund that would be used for this. They were coalescing around a figure of half the paid-in capital, which would amount to €40bn when member states pay in their final contributions.