Council chief backs Irish bank debt cut

Thu, Jan 10, 2013, 00:00

European Council president Herman Van Rompuy has expressed support for a deal to reduce Ireland’s banking debt, saying it was time to “break the vicious circle” between bank and sovereign debt.

Mr Van Rompuy made the remarks following talks with Taoiseach Enda Kenny and Tánaiste Eamon Gilmore at Dublin Castle. The meeting marked the first formal event of the six-month Irish presidency of the European Council, which began on January 1st. The discussions included several issues high on the Irish presidency agenda: the banking crisis, the European growth agenda, the stalled EU budget talks, and trade with international partners.

Mr Van Rompuy stressed the need to address the banking debt, as agreed by European leaders in June.

“One of the key objectives is to break the vicious circle between banks and sovereigns, especially for Ireland,” he said.

The European Council head is not party to discussions on the issue but he said he understood that the European Central Bank and Irish officials “continue to work hard to find mutually acceptable” arrangements. “I really hope for a positive outcome,” he added.

Kenny welcomes remarks

Taoiseach Enda Kenny welcomed Mr Van Rompuy’s backing for a cut in Ireland’s banking debt. He said the State would use its presidency to push for such a deal, which he hopes will include legacy debt.

“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.

“Clearly that’s of importance to us, the particular issue, the question of legacy assets and legacy debts,” Mr Kenny said.

He said the Government’s immediate focus would be to agree a deal on the Anglo Irish Bank debt, ahead of another €3.1 billion repayment due at the end of March.

“We do hope to have a conclusion on that matter before the March date,” he said.

‘Turning point’

Mr Van Rompuy was positive about Europe’s recovery, describing 2012 as a “turning point” in the euro zone crisis. “The worst is behind us, in particular the existential threat to the euro . . . 2013 should be the year of rebirth through stronger economic growth.”

He praised Ireland’s efforts to address the crisis it found itself in: “You are taking over the presidency at a challenging time for Europe and you are a good example of how to handle the economic crisis. Through painful but unavoidable efforts you have consistently met all your targets and more importantly you are recreating your potential for growth and jobs.”

Mr Van Rompuy hailed the National Treasury Management Agency’s successful bond auction earlier this week as “yet another sign that confidence is back in Ireland”.

Discussing the negotiations surrounding the EU budget, Mr Van Rompuy said he was optimistic about securing agreement on the budget “preferably by February”.