Dáil Éireann Debate, Wednesday - 15 January 2014
157. Deputy Micheál Martin asked the Minister for Finance if he has mentioned retrospective recapitalisation at any of his bilateral meetings with EU leaders; and if he will make a statement on the matter. [51399/13]
View answer158. Deputy Micheál Martin asked the Minister for Finance the position regarding his letter to the other 27 EU Heads of State on the need for retrospective recapitalisation of Irish banks; and if he will make a statement on the matter. [51398/13]
View answerI propose to take Questions Nos. 157 and 158 together.
The letter to which the Deputy refers was sent by the Taoiseach to the President of the European Council, Herman van Rompuy, and the Heads of State or Government in the other 27 EU Member states, for information, prior to the October 2013 European Council. The Taoiseach wrote his letter against the background of our planned exit from the EU/IMF Programme and stressed the need to deliver on long-standing commitments to break the vicious circle between banks and sovereigns.
The European Council conclusions, the agreed output of the summit, reflect the issues the Taoiseach highlighted in his letter to colleagues. The Deputy will be aware that 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 (SSM) involving the ECB, is in place and operational, the European Stability Mechanism (ESM) could recapitalize banks directly.
The Eurogroup meeting of 20th June 2013 agreed on the main features of the ESM’s Direct Bank Recapitalisation instrument (DBR). The DBR instrument will come into effect when the SSM is operational. There is a specific provision included in those main features that provides for retroactive recapitalisation. This provision states that: “The potential retroactive application of the instrument should be decided on a case-by-case basis and by mutual agreement.” Therefore, the agreement that we were active in negotiating keeps open the possibility to apply to the ESM for a retrospective direct recapitalisation of the Irish banks should we wish to avail of it. The SSM is expected to be place and operational towards the end of 2014.
Finally, I can assure the Deputy that the Irish case is made at all levels as appropriate and in this context I often engage on these matters with my European Ministerial colleagues. I remain confident that the commitment made by the EU HoSG in June 2012 to break the vicious circle between banks and sovereigns will be respected. The question of whether Ireland may apply for retroactive recapitalisation of our banks has yet to be decided upon and will, in due course, be a matter for Government, with any recommendation based on what is in Ireland’s best interest.
