Kenny: EU to decide by June on cut in bank debt

Efforts to ease Ireland’s €32bn bank debt will be decided on by the middle of next year ahead of Ireland’s expected exit from the bailout programme, the Taoiseach has said.

Enda Kenny said EU leaders will make a decision by June on the scale of the writedown on the debt which paid for the bailout of Irish banks.

The bank recapitalisation is being done through the ESM, the EU’s bailout fund, but it will be 2014 before it is completed under any agreement.

Any signal on the value of the debt cut from fellow EU leaders by June would help ease Ireland back into the international borrowing markets.

Speaking to journalists at a special briefing, Mr Kenny said: “By June, following the decision of the European Council, we expect agreement on the mechanics and the modalities [modes] of reducing the burden that the Irish taxpayer took on from the recapitalisation of the going-concern banks, Bank of Ireland, AIB, and PTSB.”

Government figures said they received strong support from European Council president Herman Van Rompuy and senior European Commission officials at a Dec 13 leaders’ summit when they asked for a definite signal on Irish banking debt next year.

A reduction in banking debt is being pushed alongside the renegotiation of the €31bn promissory note, used to bailout Anglo Irish Bank and Irish Nationwide.

A restructuring of the Government IOU for the banks is expected by March, before the next €3.1bn payment is due.

Mr Kenny last week said that it was the intention of the Government to replace the “very expensive overdraft” with a cheaper and longer loan, depending on agreement with the ECB.

In recent days, My Kenny has also said that he expects a deal to be done between the Government and Irish banks in the new year which would lead to lenders being more co-operative with troubled mortgage owners.

The latest figures show that nearly 90,000 home mortgage owners are at least 90 days in arrears.

A new deal by March would include more specific “commitments by the banks on lending and dealing with mortgage arrears”, Mr Kenny said.