Central Bank agrees plan for bank health checks with EU-IMF
Stress tests will be as close as possible to planned EU-wide version in 2014
The Central Bank of Ireland declined to comment on the talks. Photograph: Matt Kavanagh/The Irish Times
The Central Bank, the EU and the IMF have completed two days of Dublin meetings aimed at agreeing a blueprint that will make Ireland’s upcoming bank health checks as close as possible to a planned EU-wide version in 2014.
Officials at the EU and IMF both confirmed that their representatives had been in Dublin this week for talks on the design of the tests. A spokesman for the European Central Bank, the third element of the so-called troika, declined to comment.
The design of the tests will be crucial as Ireland seeks to exit the 2010 bailout in December, a prospect that could be jeopardised if the banks are found to need significant further support.
A source with knowledge of this week’s talks said efforts were focused on ensuring that the tests will be as close as possible to the European version, so the exercise would not have to be repeated in 2014.
This suggests the tests, which will cover state-owned Allied Irish Bank and Permanent TSB and Bank of Ireland, will be robust, since the European round will be the most stringent tests the EU’s banks have ever faced.
The Central Bank of Ireland declined to comment on the talks, while neither the EU or IMF would comment on the outcome of the talks.
The issue of banking stress tests has been a contentious one, with the Government initially pushing for no tests ahead of the 2014 Europe-wide round.
A compromise was agreed in May which allows for an assessment of Irish banks’ balance sheets to be carried out by the end of October, without any stress testing of how the banks would respond to future shocks.
EU-wide stress tests will be carried out in 2014, with the European Central Bank taking a lead role for eurozone countries, which will fall under ECB supervision from October 2014.