Tuesday, 2 July 2013

Questions (138)

Micheál Martin


138. Deputy Micheál Martin asked the Minister for Finance if he is satisfied that there was enough progress on banking debt during the Irish Presidency; and if he will make a statement on the matter. [31474/13]

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Written answers (Question to Finance)

As you are aware the Euro-area Heads of State and Government agreed on 29th June 2012 to break the vicious circle between banks and sovereigns, and that when a Single Supervisory Mechanism is in place involving the ECB, the European Stability Mechanism (ESM) could recapitalise banks directly. The Euro-area Heads of State and Government confirmed this position and mandated EU Finance Ministers to prepare an operational framework by mid-2013. A considerable amount of work has been undertaken at technical, senior official and Ministerial level on the ESM’s Direct Bank Recapitalisation (DBR) Instrument during the Irish Presidency. This work culminated in agreement on the operational framework for the ESM’s Direct Bank Recapitalisation Instrument at the June 20th Eurogroup of Euro-area Finance Ministers meeting in Luxembourg.

This framework builds upon the agreement secured on the 29th of June 2012, and is an important step in the Eurozone’s efforts to restore market confidence in the single currency and its banking system.

It is expected that the earliest date that the ESM DBR can come into effect will be towards the end of the first half of 2014, given the need to satisfy national procedures, and also the requirement to have the Single Supervisory Mechanism in place beforehand.

We have succeeded in having provision for retrospective recapitalisation included in the framework. Although there is still a lot of negotiation to be done on this aspect of the facility I am satisfied with the progress made during the Irish Presidency as the agreement now in place keeps open the possibility for us to apply to the ESM for a retrospective direct recapitalisation of the Irish banks, should we wish to avail of it.