Ireland’s bank debt deal hopes slip away

Hopes of a deal on Ireland’s bank debt slipped further away as Germany’s finance minister signalled there would be no reworking of such debt at a European level until 2014.

However, Wolfgang Schäuble, the German finance minister, said Ireland was on track to exit its bailout programme by the end of next year.

Speaking in Dublin after talks with Irish ministers, he said Germany was impressed with Ireland’s progress on fighting the debt crisis.

His comments followed talks with Finance Minister Michael Noonan and Public Expenditure Minister Brendan Howlin.

The three ministers discussed problems in the eurozone, relations between both nations, and Ireland’s upcoming EU presidency.

Echoing similar comments by the ECB, Mr Schäuble said that bank debts would not be dealt with until a European bank supervisor is in place in 2014.

This is needed for any direct recapitalisation of banks by the ESM, the union’s permanent bailout fund.

However, Mr Noonan said Ireland’s bank debts could be addressed in the second half of next year.

Mr Schäuble praised Ireland’s progress on its bailout programme.

“I want to say that we are all very impressed on the progress Ireland’s made in the last couple of years. Everybody knows Ireland’s had huge problems.

“Ireland is good now, Ireland is on track and it’s important for the whole eurozone. We all have the same interests.

“We depend on the Irish progress, we are thankful and we have full respect for this. Of course we will continue in solving the problems together and in supporting each other.”

Asked if a second bailout would be needed to cope with the country’s banking debts, he insisted it was clear from recent EU/IMF reports that it would not.

Reiterating recent comments by German chancellor Angela Merkel, Mr Schäuble said Ireland remained a “special case” in the eurozone.

He also claimed there was a misunderstanding over reports that he was against any deal to help Ireland cope with its €64bn in bank debt.

Mr Noonan said a more pressing short term matter was the reworking of the promissory note arrangement to fund losses at Anglo Irish Bank and Irish Nationwide.

Dr Schäuble refused to comment on this and said it was a matter between Ireland and the ECB.

The meeting between the ministers came ahead of talks between Taoiseach Enda Kenny and Angela Merkel in Berlin on Thursday.

However, Fianna Fáil said that it now seemed that any deal on Ireland’s bank debt was slipping away.

The party’s finance spokesman, Cork TD Michael McGrath, said: “We are none the wiser as to what Ireland’s special case status will mean when it comes to securing a deal on bank debt.”