Taoiseach hopeful ESM deal can be reached

StrategyTaoiseach Enda Kenny said he was hopeful that a deal on the conditions and criteria to be used by the ESM to rescue stricken banks would be in place next spring.

Mr Kenny said “it may well be” 2014 before the initiative is “up and running”, but he was confident that the parameters of any ESM recapitalisation would be finalised by the end of March ahead of the summit. Mr Kenny welcomed the decision by the finance ministers to establish a pan-European banking supervisor within the European Central Bank.

This is a key precondition for the direct recapitalisation of banks by the ESM and Mr Kenny noted that the deal had been completed within the expected time-frame.“We’ve always said the legal framework for the discussions to take place should be in place by the beginning of the year,” he said in Brussels.

“Now I hope that the heads of government can approve that, endorse it and move this on to the potential it allows for banking union, resolution, deposit guarantees and so on.”

Mr Kenny said the prospect of other EU leaders accepting the March deadline was “very good”.“I would hope that after discussion [by] the heads of government that will be endorsed. That’s another step in the right direction.”

European Council president Herman Van Rompuy went into the summit calling for agreement on the terms for any direct ESM bank rescue by March. Dublin supports this position but Germany was expected to dispute the time-frame.

The details of how the ESM will recapitalise banks, and under what criteria, has important implications for Ireland’s renegotiation of the terms of its own bank rescue. But even if the legal mechanism is pinned down by March, it is unclear whether this would include mention of retrospective debt.

On the €3.1 billion Anglo Irish Bank promissory note due in March, Mr Kenny said progress had been made. “Obviously it is a complex and technical matter but I do hope that the objective of the government here on behalf of the people can be reached.”