Gilmore: Any EU bank debt deal must suit Irish interests

Tánaiste Eamon Gilmore has said that a Europe-wide solution could be the answer to Ireland's bank debt problems.

Mr Gilmore was speaking in the Dáil this morning after Sinn Féin accused the Government of fudging the issue of bank debt in the wake of last week's Yes vote in the EU fiscal treaty referendum.

However the Tánaiste insisted that any deal reached in Europe must be in the best interests of the Irish taxpayer.

"There is the possibility of there being a Europe-wide solution to banking debt generally, which would be of benefit to Ireland," Mr Gilmore said.

"In the event of any such European-wide solution to bank debt, obviously we have to take care that it is a solution that suits the Irish situation."

The Tánaiste's comments come amid continuing uncertainty in the euro area and widespread speculation that a bailout may be required to prop up Spain's struggling banking sector.

Spanish Prime Minister Mariano Rajoy is pushing for the use of the EU’s permanent bailout fund, the ESM, to recapitalise its banks.

Ireland would hope to avail retrospectively of the same terms should Spain be granted such a deal, with Taoiseach Enda Kenny insisting last Friday that Ireland’s banking debt had to "form part of the solution" to the eurozone debt crisis.

However recent days have seen German officials quoted as saying there is no room for movement on Irish bank debt, while ECB President Mario Draghi yesterday also moved to damp down hopes.

Speaking after the ECB held fast on interest rates, Mr Draghi said there should be no expectation of a quid pro quo for approving the treaty in last week’s referendum.

Mr Draghi welcomed the Irish Yes vote at an ECB press conference in Frankfurt, saying it was "a testimony" to the Irish electorate’s "responsibility".

However, he was circumspect when asked if it strengthened the case for bank debt relief.

Ireland had already achieved "substantial progress on fiscal consolidation and on bank restructuring", and the "implicit message" was to "continue on this path".

Sinn Féin's Mary Lou McDonald accused the Tánaiste of failing to stand up for the national interest.

“Media headlines continue to be dominated with clear demands from the Spanish government for financial support for their banks," Deputy McDonald said.

“The only stability this treaty will deliver is more of the same failed policies," she added.

“Unlike the Spanish Government, Labour and Fine Gael have both failed to stand up for our national interest and have in turn failed our people.”

Meanwhile Spain's government today managed to secure some much-needed funds, easing the pressure on the EU to bail it out.

The country was raising cash through a bond auction this morning, but the cost to Spain has been higher than expected because investors see them as increasingly risky.

Spain had to pay just over 6% on 10-year bonds, a quarter of a per cent higher than last April.

Additional reporting: Irish Examiner