Kenny Says Talks With ECB on Fixing Banks to Resume After Tests By Dara Doyle and Joe Brennan - Mar 25, 2011 3:48 PM GMT+0100
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Irish Prime Minister Enda Kenny said talks with the European Central Bank on fixing the country’s banks will resume after stress tests are published next week.
The government is pushing the ECB to create medium-term funding for Irish banks and wean them off emergency liquidity. Finance Minister Michael Noonan has twice traveled to Frankfurt for talks with the ECB, Kenny told reporters in Brussels today.
Irish banks would have more “credibility” in markets if they had access to a “medium- to long-term funding facility,” Kenny said in an interview with Dublin-based broadcaster RTE. “The ECB accepts it would not be prudent to have immediate fire sales.”
Kenny said he’s “hopeful” European finance ministers will “make progress” on easing the terms of Ireland’s bailout after the capital needs of the banks are clarified. As part of last year’s international rescue, 35 billion euros ($49.5 billion) was earmarked for the banks, with the government due to make a decision on March 31 about how much will be drawn down.
Ireland may have to inject 27.5 billion euros into the banks, according to a survey of 10 analysts and economists. Kenny said some of the more “extreme” estimates are based on a scenario where banks were forced into a “fire sale” of assets as the ECB seeks to reduce its Irish exposure.
In 2008, Ireland’s government provided a guarantee for six lenders including the country’s four so-called viable banks that are the focus of the present stress tests: Bank of Ireland Plc, Allied Irish Banks Plc, Irish Life & Permanent Plc and EBS Building Society.
Irish borrowings from the ECB amounted to 116.9 billion euros, according to figures published this month, in addition to as much as 70.1 billion euros in exceptional liquidity from the Irish central bank.
To contact the reporters on this story: Dara Doyle in Brussels at ddoyle1@bloomberg.net; Joe Brennan in Dublin at jbrennan29@bloomberg.net
To contact the editor responsible for this story: Tim Quinson at tquinson@bloomberg.net |