Blow to bank deal hopes

Ireland’s chances of convincing EU leaders to recapitalise the €32bn bank debt decreased last night as finance ministers said they would cap the amount of the EU’s rescue fund that goes towards banks at about €40bn.

Michael Noonan, the finance minister, played down the issue on his way into a meeting of eurozone ministers, saying he hoped the Government would resolve many of the legacy problems they inherited by the end of their mandate in 2016.

The ministers had their first discussion on how the European Stability Mechanism would step in and break the link between the taxpayer and the privately owned banks.