Ireland's Noonan: Markets Still Wait Convincing Solutions To Crisis
November 27 2011 - 9:56AM
Dow Jones News
International markets are still waiting for Europe's leaders to
agree credible solutions for the euro-zone debt crisis, Irish
Finance Minister Michael Noonan said Sunday.
And because of the market turmoil surrounding the euro area, he
said the Irish government will need to inject about EUR1.3 billion
to complete the recapitalization of Irish Life & Permanent PLC
(IL0.DB), a now-nationalized lender, after talks to buy out its
life business fell through.
Advanced talks with the preferred bidder, Canada Life Assurance
Co., collapsed last week because of the turmoil involving users of
the common currency, including a credit rating downgrade for
Belgium and the failure of Germany to sell part of its debt at an
auction, Noonan said.
"Internationally, every body in the money business is waiting
for a European solution that is convincing. And that hasn't been
forthcoming yet," he told Irish broadcaster RTE Radio.
He also said his 2012 budget to the Irish parliament when he
will detail EUR3.8 billion in spending cuts and tax increases will
for the first time be extended over two days, on Dec. 5 and Dec.
6.
Noonan is obliged by Ireland's bailout lenders, the European
Union and International Monetary Fund, to reduce a budget deficit
of about 10.3% of gross domestic product this year to 8.6% of GDP
in 2012.
Amid its deep banking crisis, saving Irish banks has cost
Ireland about EUR63 billion, equivalent to 40% of the country's
annual economic output. Such huge costs forced the Irish
authorities in November last year to tap international bailout
loans from the EU and IMF.
Irish Life, once Ireland's largest pensions and home loans
provider, is one of six Irish lenders that have required huge
amounts of government aid to keep them from collapse amid the
crisis.
The government has already injected EUR2.7 billion into Irish
Life and effectively owns the firm outright. It had hoped to raise
over EUR1 billion from the sale of the life unit to Canada Life and
thereby complete the EUR4 billion recapitalization that the heavily
loss-making group needs.
Noonan said Sunday he was confident that Irish Life won't
require more government aid.
-Eamon Quinn, Dow Jones Newswires; +353 1 6762189;
eamonquinn@dowjones.com
-0-