Barroso and Van Rompuy back Irish bank debt deal

Thu, Jan 10, 2013, 00:00

European Commission president José Manuel Barroso has said he is supportive of Ireland finding a solution to the promissory notes issue, echoing comments by European Council president Herman Van Rompuy yesterday.

In an interview with The Irish Times on the eve of today’s European Commission visit to Dublin, Mr Barroso said the commission was generally in favour of a deal, though he declined to comment on specific proposals, stressing it was in the remit of the European Central Bank.

New momentum

The support from the heads of two European institutions for a deal to reduce Ireland’s banking debt greatly increases the momentum behind securing such a deal. With the next €3.1 billion interest payment on the Anglo Irish Bank promissory note due in just over 11 weeks, the Government will be under pressure to secure a deal on interest repayments, which needs the support of the European Central Bank. Mr Barroso said Ireland’s presidency of the European Council offered a great opportunity for the State to “make its case better known” regarding a potential bank debt deal, as well as showcasing the “extraordinary resilience of the Irish economy and the capacity of the Irish people”.

He also strongly defended the role played by the European Union in the financial crisis.

“This crisis was not created by the European Union. This crisis was created by unsustainable public debt created by national governments and by irresponsible financial behaviour tolerated by national supervisors,” he said.

Taoiseach Enda Kenny said the State would use its presidency term to push for a deal on bank debt.

Irish priority

“While we have a duty and a responsibility in terms of the European agenda, we have not lost sight of our immediate requirement, which is to deal with the question of the state of our bank debt, and that is the priority for Ireland’s presidency,” he said. The Government’s immediate focus would be to agree a deal on the Anglo Irish Bank debt ahead of the March repayment date. “We do hope to have a conclusion on that matter before the March date,” he said.

Separately, the Government is hoping that the European Stability Mechanism fund can directly invest in AIB and Bank of Ireland, an arrangement that needs the backing of other euro zone member states.

Bank of Ireland: State stake reduced

The Government yesterday sold Bank of Ireland bonds worth €1 billion to a number of international institutional investors, marking the first return of public money injected into the banking system.

Minister for Finance Michael Noonan welcomed the sale and said a further €7 billion in public investments in Bank of Ireland, AIB and PTSB, over and above ordinary shares, would be sold at the appropriate time. The €1 billion bond investment was part of €64 billion the public invested in the banks. Business + Technology