FINANCE MINISTER Michael Noonan has expressed his hope that a deal restructuring the government’s promissory note for Anglo Irish Bank could be reached in the coming weeks – a move which he says would make it easier to construct the next Budget.
Speaking before the first meeting of the board of governors of the new European Stability Mechanism in Luxembourg this evening, Noonan told reporters that the European political timetable was to have “a new arrangement on the promissory note by March”.
The minister said this would mean the government could avoid the next “very onerous” €3.06 billion repayment – but added that he was still seeking an even quicker conclusion of such a deal.
“It would help me doing the Budgetary arithmetic if something could be arranged, or a statement of intent could be achieved, before the Budget,” he said.
Asked if there was a realistic prospect of having a deal by Christmas, he said: “I would certainly hope that the March date is feasible.
Seeking an agreement before Christmas was “a negotiating position I’ve put forward, and I’ve stressed the importance of an earlier resolution from my perspective,” he added.
It was reported last month that the government was considering replacing the promissory notes – which, when interest is included, will cost about €47 billion over the next two decades – with a 40-year bond worth up to €40 billion.
This bond could be ‘sold’ to the former Anglo Irish Bank, now the Irish Bank Resolution Corporation. IBRC would then use the bond to go to the European Central Bank and access everyday working capital, replacing the promissory note which is presented to the Central Bank of Ireland for similar reasons.
Bank deal still possible, but not until next year
Noonan separately said a deal on allowing the new permanent Michael Noonan speaks to Eurogroup president Jean-Claude Juncker before today’s inaugural meeting of the European Stability Mechanism.Stability Mechanism – which is officially inaugurated this evening – to share the burden of recapitalisating the banks was not likely until a new pan-European banking supervisor had been set up.
He said this was currently planned for January 1, but at the latest by the end of March. When this authority had been established and could oversee the use of European money in each institution, a deal could then be sought to have the ESM take over some of the State’s banking shares.
Noonan also revealed that the Dutch finance ministry had clarified its stance following the ‘Helsinki statement’ of two weeks ago when the Netherlands, Germany and Finland appeared to rule out the use of ESM funds to recapitalise ‘legacy’ banks.
The Netherlands said this had meant they would not support the use of ESM funds for banks which were no longer active – such as IBRC – but that it could still be used to supplement lending to banks which were still lending and in full operation.
This meant that AIB and Bank of Ireland could be eligible for help from the ESM, irrespective of the fact that the Irish taxpayer has already injected the necessary funds into those banks.
The minister commented that the terms of the ESM’s establishment – which include specified interest rates to be charged to banks which access its funds – indicated to him that there was full European support for the earlier commitment to break the link between banks and states.