By Eamon Quinn
DUBLIN--Ireland will be "aiming high" in upcoming negotiations
to lighten the country's huge bank debt burden following a
euro-zone agreement to allow rescue funds to finance the bloc's
broken banks, Ireland's deputy leader Eamon Gilmore said
Sunday.
Since the agreement was struck late last week in Brussels, the
Irish government has hailed the decision of euro-zone leaders--to
use the euro zone's European Stability Mechanism to directly
recapitalize banks--as a "seismic" development in Ireland's efforts
to get a grip on its five-year banking crisis.
It had long complained that the euro zone had unfairly obliged
Irish taxpayers to shoulder most of the costs of rescuing formerly
private banks when the country's bloated commercial property market
crashed from 2008 onwards. Amounting to about 63 billion euros, or
40% of its annual economic output, Ireland faces one of the world's
costliest bank rescues.
As those bank-rescue costs escalated, it was forced to strike a
67.5 billion euro bailout deal with the EU, International Monetary
Fund and European Central Bank, in late 2010.
The Irish authorities have argued that refinancing the banking
debt burden will help it get back to full market funding next year,
and boost the country's modest economic recovery.
The euro-zone agreement on bank debt has now opened the way for
Ireland to negotiate a debt-lightening deal before the end of the
year, Mr. Gilmore told Irish broadcaster RTE Radio, saying he was
"confident that we will also succeed on this matter."
Though his government would be "aiming high" in private
negotiations with euro-zone authorities, he refused to specify how
much of Ireland's banking debt it hoped to have refinanced in any
such future deal.
"Our objective is to improve the country's debt sustainability;
to minimize to the greatest extent possible the burden of the bank
debt of the Irish taxpayer; to improve Ireland's credit rating and
in doing so to improve the possibility of credit extending right
through the economy so that jobs are created and we get economic
recovery faster," he said.
Since the agreement was announced, government ministers had
refused to say how much of the 63 billion euros that Irish
taxpayers pumped into its stricken lenders could be retrospectively
refinanced through the ESM, saying that they hoped negotiations
would agree on the figure before October.
The government had previously estimated it may refinance between
30 billion euro and 40 billion euro of its bank aid through the
ESM.
Citing unnamed senior government sources, the Irish edition of
The Sunday Times reported that Ireland will seek to refinance
approximately 32 billion euros it has pumped into three surviving
banks--Allied Irish Banks PLC (ALBK.DB), Bank of Ireland PLC, and
Irish Life & Permanent PLC.
Separately, it still wants to restructure 32 billion euros in
promissory notes pledged to two other so-called "dead" banks--Anglo
Irish Bank Corp. and Irish Nationwide Building Society, now jointly
renamed the Irish Bank Resolution Corp., the newspaper said.
Write to Eamon Quinn at eamon.quinn@dowjones.com