I have not had any discussions with Chancellor Merkel since her recent re-election. However, as the Deputy will be aware, the Euro-Area Heads of State or 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 ESM could recapitalize banks directly. The Euro-Area Heads of State or Government confirmed this position and mandated EU Finance Ministers to prepare an operational framework by mid-2013.
The Eurogroup meeting of Euro-Area Finance Ministers on 20th June 2013 agreed on the main features of the European Stability Mechanism’s Direct Bank Recapitalisation instrument (DBR). The instrument will come into effect when the Single Supervisory Mechanism is in place and operational. Given this requirement, the earliest this can happen will be mid-to-late 2014.
We have succeeded in having specific provision for retrospective recapitalisation included in the main features which states that "The potential retroactive application of the instrument should be decided on a case-by-case basis and by mutual agreement." There is still a lot of negotiation to be done on this aspect of the facility but the agreement now in place keeps the possibility to apply to the ESM for a retrospective direct recapitalisation of the Irish banks open for us, should we wish to avail of it. This overall framework builds upon the agreement secured on the 29th of June 2012, and is an important step in the Eurozone's efforts in this regard.