Ireland will take aid 'if bank issue too big'

 

Minister for Finance Brian Lenihan today said the Government will accept European support if the banking crisis is too big for Ireland to fix on its own.

Speaking this morning, Mr Lenihan said Ireland would work with its EU partners to address structural problems in the Irish banking system, but he refused to set a deadline for the end of talks, which are set to begin tomorrow.

He said a "short focused consultation" with officials from the European Central Bank (ECB), EC, and International Monetary Fund (IMF) would start in Dublin tomorrow.

Mr Lenihan, speaking on RTÉ radio, insisted Europe stood "shoulder to shoulder" with Ireland and that the ECB was "fully behind" the Irish banking system.

"Despite a large range of measures adopted by the Government, Ireland is a small country, and if the banking problems in the country are too big for this small country to manage, Europe is making it clear that they will help and help in every possible way to secure the system because we are part of the euro system . . . and that's the framework within which we work," he said.

The Minister said the ECB was standing "fully behind" the Irish banking system and said there was no funding problem for the Irish banking system, adding: "There is no need to have any concerns over safety of banking deposits."

Mr Lenihan, who met euro zone finance ministers in Brussels last night, denied Ireland was alone in this crisis. "We're part of a common currency, we're not on our own, we're part of the euro zone, and the finance ministers of the euro zone are determined to take whatever action is needed to safeguard financial stability throughout the euro area - that includes Ireland."

"What we've agreed to do is to look at structural problems in the Irish banks in light of recent market pressures and assess what needs to be done because banking questions are technical and difficult, and an intensive engagement will now take place," he said.

Questioned on the issue of potential British bilateral loans, Mr Lenihan said that was a matter for the United Kingdom. He noted it had not generally played a role in EU-wide assistance but added: "The British authorities are anxious to ensure any assistance Ireland needs will be given . . . it's not a matter for the Irish authorities.

"The euro zone is determined to protect its own financial system, and that's very important, and the statement made very clear last night that the measures undertaken by Ireland to deal with the issues in the banking sector . . . were welcomed by them and were seen as appropriate by them."

Mr Lenihan refused to be drawn into any detail over cost of any bailout package, and he defended the bank guarantee, saying the Government's action had been backed by Europe's finance ministers.

He said the reality was that without the bank guarantee, the State would not have a banking system, and consequently a huge loss of jobs, credit and enterprises. "The guarantee shored up the system for a while, but of itself it has not been sufficient," Mr Lenihan said.

The Minister said the Government was considering the four-year budgetary plan this week and would publish it before the end of the month, adding the budget will go ahead as scheduled on December 7th.

He said there was ''no question" raised in the European talks over the Government's budgetary strategy. "Our budgetary policy has full confidence among of our European partners," he said.

"But in relation to banking, the steps taken to date require further support, and if that further support is required, we will avail of it."

Mr Lenihan also declared Ireland's corporation tax rate was safe. He said this was not a matter that arises for the EU and was fundamental to the State's growth prospects.