Deal on reducing bank debt will not conclude by June, says Kenny

Fri, Feb 15, 2013, 00:00

MARY MINIHAN

A deal on reducing the State's overall bank debt burden originally expected to be concluded by June will not now be agreed by the summer, Taoiseach Enda Kenny has confirmed.

Mr Kenny told reporters in a pre-Christmas briefing that the Government expected agreement by June 2013 on the €32 billion cost of the recapitalisation of AIB, Bank of Ireland and Permanent TSB.

Yesterday he said he did not underestimate the scale of the challenge of the ongoing negotiations or how complex they might be. "There won't be a deal by June; what was requested by the European Council was that the mechanics of the structure would be available by June," he said.

Mr Kenny said the understanding was a decision on recapitalisation could not be arrived at until a single supervisory mechanism was in place and working effectively.

"What was to be done by June was to put in place the mechanics of how that single supervisory mechanism would actually work," he said.

Mr Kenny said Minister for Finance Michael Noonan was involved in eurogroup talks about the matter and a working paper had been commissioned.

The working paper related "to the principle being accepted but not finalised, of a similar extension of the maturities to be given to Portugal and Ireland as was given to Greece". He said a report was due next month.

"The group will hopefully put together the structure of the single supervisory structure by June, but in reality this will not become and cannot become effective until very late this year or into 2014.

"I don't underestimate the scale of the challenge of those negotiations or how complex they might actually be."

Meanwhile, political wrangling over the incoming property tax continued yesterday with Fianna Fáil's spokesman on social protection Willie O'Dea describing the levy as "unfair". He complained there would be no exemptions for households in mortgage arrears and ability to pay would not be taken into account.

Fine Gael TD Kieran O'Donnell accused Fianna Fáil of hypocrisy. Fianna Fáil's "late conversion to an anti-property tax stance last autumn reeks of political opportunism and economic naivety", Mr O'Donnell said.

"Despite having agreed to introduce the property tax with the EU-IMF troika in December 2010, Fianna Fáil is now trying to present itself as an anti-property tax party."

Sinn Féin said it was preparing legislation to attempt to repeal the tax. Deputy leader Mary Lou McDonald said the tax was designed by Fianna Fáil and was being delivered by Fine Gael and Labour.