in Luxembourg
Minister for European Affairs Paschal Donohoe insisted yesterday that Irish banks are “well-capitalised” and “well- scrutinised,” as euro zone authorities prepare to review balance sheet assessments of Ireland’s main banks.
Speaking after the euro group meeting in Luxembourg yesterday evening, EU Commissioner Olli Rehn declined to speculate on the outcome of the tests, but said the Commission was working closely with the Irish Central Bank on the review.
With discussions set to intensify between the Government and the troika following today's budget, the balance sheet assessments of Bank of Ireland, AIB and Permanent TSB are the main remaining milestone for the State as it seeks to exit its three-year bailout in December.
Minister for Finance Michael Noonan is expected to meet with euro zone officials in Strasbourg and Frankfurt within the next few weeks before travelling to Washington for talks with the IMF.
"We need to see the outcome of the asset quality review in the coming weeks, to be 100 per cent sure about the exit mechanism," a European Commission official told The Irish Times yesterday.
The Government is expected to argue strongly that the results of the balance sheet assessment should be dealt with separately from a discussion on a possible precautionary credit line for Ireland, and that the State is well funded to deal with any potential capital issues arising in the banks from its own resources.
Bank risk
Earlier in the day, European Central Bank executive board member Jörg Asmussen said that the banks could be a risk for Ireland as it exits the bailout.
Despite the success of the Irish bailout programme, the banking sector as well as the Irish deficit, which exceeds the European average, constitute “pending risks”, he said.
Speaking following the euro group meeting, the chairman of the euro group Jeroen Dijsselbloem said a final decision on an exit strategy for Ireland would be made at next month's euro group meeting.
“All options are open,” Mr Dijsselbloem said. “We have a joint interest in making the access to market as successful and sustainable as possible.”
Minister for European Affairs Paschal Donohoe said that discussions on a bailout exit strategy for Ireland would commence after the budget.
“When that is complete the Government will then be engaging with the troika to evaluate all options in relation to exiting our bailout programme,” he said.
He also stressed that the Taoiseach and Tánaiste had already committed to making a “sustainable exit” from the programme.
Irish 10-year government bond yields fell to their lowest level in four months yesterday, following confirmation by Taoiseach Enda Kenny that Ireland would exit the bailout on December 15th, the day the IMF programme expires.
Ireland is due to receive the last instalment of €2.3 billion from the EFSF by the end of the year, after the Troika’s visit at the end of this month.
Noting that Ireland’s bailout was due to come to an end in two months time, Commissioner Olli Rehn said that the programme for Ireland had contributed to its economic turnaround.
