Brussels, 01/04/2011 (Agence Europe) - Now that the increased capital requirements for Ireland's bank have been published, Dublin wants to enter talks to renegotiate less stringent lending criteria for the aid it has received from the EFSF and it is possible that progress will be made at the ECOFIN Council in Budapest on 8 and 9 April 2011. On Friday, a spokesperson for EU Economic and Monetary Affairs Commissioner Olli Rehn said that the Commission was waiting for the Irish government to share its analysis of the banking system with its partners, referring to the results of the stress tests and the root-and-branch restructuring of Irish banks. This analysis should make a positive contribution to the talks on reducing the interest rate on the loans to Ireland, added the spokesperson, pointing out that Olli Rehn is in favour of a reduction in the interest rate on the Irish loans. Any reduction in rates would apply to any country requesting aid, not just Ireland.
According to the Irish national bank, four Irish banks will need in total a further €24bn to stabilise the country's banking system, bringing the total Irish bank bailout to €70 billion, a massive 45% of Irish GDP (see EUROPE 10349). Rehn's spokesperson said the additional funding requirements can easily be covered by the international financial aid package. Ireland's banking system will, in the future, include two Irish banks and a raft of foreign banks.
Describing the measures recommended by the Irish government as a major step forward, the European Commission, European Central Bank and International Monetary Fund commented in a joint press release: “The EC, ECB and IMF therefore share the rigorous capital needs assessment and strongly support authorities' plans to ensure that these capital needs are met in a timely manner. The capital needs can be funded comfortably under the programme supported by the EU and IMF.” The three bodies say that the Irish banks will still be dependent on funding from the Irish central bank and the ECB, despite the bailouts. Commenting on the restructuring, they say that it will have to be submitted to the European Commission to see whether it complies with EU state aid rules. (M.B./transl.fl)