Bank recapitalisation not going to happen, says TD

A claim by People Before Profit TD Joan Collins that the Government failed to take bank recapitalisation into account in its economic growth document was rejected by Taoiseach Enda Kenny.

Ms Collins said she had found only two sentences referring to it in the 66-page document. “We can only come to the conclusion from this that the Government has thrown in the towel and that retroactive recapitalisation is not going to happen,’’ she said.

She said the document noted “the euro group has agreed that retroactive recapitalisation may be agreed on a case-by- case basis as part of the European Stability Mechanism’s direct banks recapitalisation instrument.’’ The document added, she said, that significant work remained to be done on the details of this instrument.

Ms Collins said Mr Kenny and the Government were accepting a situation where 40 per cent of the cost of bailing out the EU banking system was borne by the State, with only 1 per cent of the population.

Share sale
Mr Kenny said the successful sale of €2.05 billion in preference shares, including principal profit and accrued interest, by Bank of Ireland last week, was important and a sign of confidence.

“The State has now recouped a net positive cash return of €1.1 billion from its overall investment in and support for Bank of Ireland,’’ he added.

“That net cash return is before account is taken of the State’s continuing equity investment in the bank, which is worth a further €1.2 billion at current market prices.’’

The question of bank recapitalisation, he said, was the subject of quite a deal of current discussion.