Deal on €3bn bank debt could be in place within weeks, says Noonan

A deal on Ireland’s bank debt, which would scale down March’s €3bn repayment considerably, could be in place within weeks.

The ECB, which has been reluctant to agree an arrangement with the Government, shifted its stance over the weekend following intense pressure from the IMF and EU finance ministers.

It followed a tour of Berlin, Paris, and Rome by Finance Minister Michael Noonan prior to the two-day meeting in Cyprus where he enlisted the support of the eurozone’s most powerful members.

Leaving the meeting, a delighted Mr Noonan said: “There is very strong support now at political level for an arrangement for Ireland to make its debt more sustainable.”

The support would cover not just the €31bn Anglo Irish Bank promissory notes, but also a refinancing of the €31bn pumped into the banks before the bailout.

Mr Noonan was reasonably confident that with a little more political lobbying he would get the unanimous support of his fellow finance ministers to in effect offload the banks to the new EU rescue fund, the ESM.

Following a year of discussions with the ECB, the talks on the promissory notes were mired in difficulties with the bank favouring a deal that could see the promissory notes debt added to the national debt.

Now, however, the atmosphere has changed. “There seems to be a willingness, more than there was, at the [ECB] to engage with us and they are being pressed by many of our colleagues around Europe,” Mr Noonan said.

He would not put a deadline on it but remarked that ECB executive council member Jörg Asmussen told journalists they were “under urgent pressure” now to resolve the issue.

Mr Noonan was at pains to say that the October date was a target rather than a deadline, and the quality of the deal was more important in relation to the promissory note. “The next pressure point is when the €3bn becomes due at the end of March, so that is the next timeline. It would suit, of course, if I could get things done before the budget.”

After very little time spent on the promissory notes over the past few months, the discussions at technical level were revived recently.

Mr Noonan said some difficulties were being removed as the technical work proceeds, “but others still remain — we will continue to talk”.

“But there is a willingness among all participants to make an arrangement that is workable.”

Mr Noonan would not comment on how big the benefit to Ireland would be of a deal on the debt, saying there were too many variables to be decided.

Ireland received widespread praise for hitting the targets of the austerity programme and Mr Noonan said now that the review had been approved by the EU finance ministers, the Government can begin to draw down another €1bn for services.