Banks ‘don’t need further bailout’

No further bailout of the banks is needed at present, the Government has been advised by the Central Bank.

Finance Minister Michael Noonan yesterday revealed that banks had been given a provisional clean bill of health and said if lenders needed any future injection of funds, it would likely come from the private sector after the country exits the bailout next month.

However, Mr Noonan said the Government was still pursuing support in Europe for the direct retrospective recapitalisation of Irish banks.

Speaking to the Oireachtas Finance Committee, he said the main stress tests on the banks would not go ahead until late next year.

“The Irish banks are strong, there’s going to be a round of stress testing in the autumn. The advice from the Central Bank is that they have identified no additional requirement for capital. Of course, there’s always the possibility that additional capital will be required.

“In the first instance, if there’s a capital requirement, private funding and profit sharing will be the way to go.”

Ireland’s exit from the bailout programme will be on the agenda today during talks between the finance minister and his European counterparts in Brussels.

He also said yesterday that there was soft data in the last two weeks suggesting a pick up in the economy had begun. “A lot of families are finding it very hard but in general, people are paying off debt at a very rapid rate in Ireland and that has a macro economic effect in reducing demand in the consumer market.

“While we have an awful lot to do yet, I can see signs of increased demand in the markets since the budget. Everybody in the Dáil has anecdotes — if they are living in Dublin it is taking another quarter of an hour to get to work, all the trucks on the road.

“There’s an awful lot of data in the last two weeks which suggests that there’s a general perception building.”

He said Ireland was still pursuing the retrospective bailout or recapitalisation of banks, a measure delayed by the elections in Germany.

“Yes, it has been agreed by the Eurogroup that retroactive recapitalisation of banks on a case-by-case basis can be considered once the direct bank recapitalisation instrument comes into force. However, there is a long way to go in the negotiations and as each case will be considered on its merits it would not be appropriate for me to prejudge the outcome at this early stage.”


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