Noonan wins qualified victory on loan repayment

Repayment dates for some of Ireland’s bailout loans will be extended to avoid them coinciding with the repayment of other debts, EU finance ministers are expected to agree this morning.

The issue was raised by Finance Minister Michael Noonan with fellow eurozone ministers in Brussels and it received a positive response, according to the president of the eurogroup, Jeroen Dijsselbloem.

The next step will be for the troika to work out the details, he said, and come back, probably in April, on the technical questions to ease the country’s exit from the bailout programme and back to the markets.

“It was a good discussion with a lot of positive support for the work being done in Portugal and Ireland,” said Mr Dijsselbloem.

However, hopes that the maturity dates of the €67bn debt would be pushed out to 30 years were dashed. On his way into the meeting, Mr Noonan said he hoped the current average maturity of 12.5 years would be extended to 15.

Portugal, with an average maturity of 15 years, was seeking to change the repayment schedule to alleviate peaks in their debt repayments. The Portuguese finance minister, who raised the issue at the meeting, said afterwards he had received political endorsement for it.

Ireland continues to push for funds from the bailout fund, the ESM, to pay the Government for at least some of the €32bn it put into the pillar banks under the direct recapitalisation of banks scheme being drawn up by the finance ministers at the moment.

Mr Noonan said yesterday was an important day for Ireland, when the issue of which bank loans would qualify for funding from the ESM was being discussed. He drew a distinction between legacy assets and retrospective loans such as Ireland’s.

Mr Dijsselbloem said the meeting discussed the recapitalisation guidelines and talked about retroactivity to find out where ministers from the various countries stand on it. “But we have not drawn conclusions on it yet,” he said. “There is a difference between them and having said that, there is a large discussion behind it which will come back on our agenda”

Germany and the Netherlands are among those insisting that countries that were not under direct supervision of EU institutions should not qualify for direct funding from the ESM, and since the ECB will not take over responsibility for supervising the eurozone’s banks until next year, no past debt would be covered.

However Mr Noonan said that while the legacy issue was about dead banks — such as Anglo Irish, which had been resolved with the promissory note deal — the retroactive concept should apply to trading banks like AIB and Bank of Ireland “to compensate Ireland for the recapitalisations they made when the policy instruments that are now being put in place for other countries were not available”.

“There is a valid case for that,” said Mr Noonan. “I will be pushing that case strongly and I hope that the retroactive issue will be in the draft regulations.”

No final decision will be made on this now but the discussions will lead to political policy guidelines that drafting experts will then follow. No decision is expected on the rules for direct bank recapitalisation until at least June.

Latvia is expected to begin the process of looking to join the euro today, asking the European Commission to make a report on whether they comply with the conditions.