Rehn: No black holes due to emerge in bank stress tests

EU economics commissioner Ollie Rehn has given Irish banks a clean bill of health and said no new “black holes” are expected to emerge during the stress testing of institutions next year.

Just days ahead of Ireland leaving the bailout programme, the European Commission’s vice president has also spoken for the first time about his shock when he first heard about the country’s bank debt.

He also said that one of the mistakes that Ireland had made was to issue a blanket guarantee for the banks.

In an interview with RTÉ’s Prime Time last night, Mr Rehn said he recalled meetings with the late finance minister Brian Lenihan in Sept 2010.

“I must say that even though I was quite prepared to hear large figures, I was quite shocked when hearing that the capital hole is around 60% of GDP. In retrospect I think it is quite easy to spot some mistakes like the blanket guarantee for banks, but that is now water under the bridge and now we have re-directed the river and we are on a better place for the moment.”

Mr Rehn would not be drawn on whether Ireland might still get a deal from the EU’s emergency fund on historic bank debt. However, he was optimistic about next year’s stress tests on Irish banks.

“I believe that they should not reveal new black holes or capital holes. The recent balance assessment has been done effectively and credibly and in our view these balance sheet assessments show that the Irish banks are now in a healthy and resilient position.”

Cabinet ministers will today reveal Ireland’s plans for after the official exit from the troika programme on Monday.

Taoiseach Enda Kenny will make a television address on the weekend before the Coalition releases a six-year plan for the economy next week.

Government figures last night said the plan would not differ hugely from budgetary plans already decided. A source said: “It’s macro economic, broad brush strokes and will include everything from social protection to jobs to our relationship with Europe.”

Speaking in Dublin, Mr Kenny said the public wanted assurances the economy was in good hands, with the troika leaving: “It’s important for people to understand that the Government is going to be able to keep a firm hand on the tiller here and that we’ve got a very steady approach to what our target is.”