The European Commission has said there is no legal provision in the European Stability Mechanism (ESM) to lend money directly to banks without going through a State bailout.

GERMAN Chancellor Angela Merkel and the International Monetary Fund’s managing director, Christine Lagarde, will meet in Berlin tonight as pressure grows to complete the Greek debt swap needed to put a rescue plan in place.

A spokesperson for the European Commissioner for Economic Affairs Olli Rehn has said there is nothing to indicate that a second bailout will be needed for Ireland.

GREECE’S ability to avoid default hangs in the balance as international monitors prepare to assess whether prime minister George Papandreou’s government can meet the conditions of rescue loans.

There was no quick response, as an economic problem became political

The European Commission insisted today it isn’t bluffing over the euro crisis - if Greece does not vote for more austerity tomorrow there is no more EU bailout money.

IRELAND’S focus remains firmly on getting a cut in the interest rate on its bailout, Finance Minister Michael Noonan said as eurozone ministers agreed the details of a €78 billion loan for Portugal at a lower rate of interest.

REPORTS that the EU was preparing for a Greek default were rubbished by the European Commission yesterday but investors appeared to like the idea and the euro moved up a little against the US dollar.

THE GOVERNMENT could announce its restructuring plan for the country’s major banks in the coming days — possibly before the end of the weekend.

THE GOVERNMENT has tried to quell rising concern over the future stability of the country’s banks by denying it is set effectively to nationalise Bank of Ireland — on top of AIB — by the end of this week.