Deals on reducing the State’s overall €63 billion bank debt are expected to be concluded by June, the Government has confirmed.
Taoiseach Enda Kenny told reporters last week in a pre-Christmas briefing that the Government expected a deal by June next year on the €32 billion debt for the recapitalisation of AIB, Bank of Ireland and Permanent TSB.
The European Stability Mechanism, which will not come into effect until 2014, will invest directly in banks across the EU. But a deal is expected by June.
So-called historic debt was not to be included but the Government is confident the State’s debt will be reduced and Mr Kenny said he expected EU leaders to agree by June the extent of the debt reduction.
“By June, following the decision of the European Council, we expect agreement on the mechanics and the modalities of reducing the burden that we took on, or that the Irish taxpayer took on, from the recapitalisation of the going-concern banks,” he said.
It will be at least €8 billion based on the current market value of the State’s shareholding in the three banks, but the Government is hopeful the figure will be higher.
Discussions on a deal for the bank recapitalisation debt have been taking place alongside the promissory note negotiations.
Both the Taoiseach and Minister for Finance Michael Noonan have already confirmed the Government’s determination to have a deal done before the March 2013 deadline for the next €3.1 billion promissory note payout.
Ireland has been engaged in intensive talks for a deal on the €31 billion involved in the bailout of the former Anglo Irish Bank, now the Irish Bank Resolution Corporation (IBRC), and Irish Nationwide.
Speaking about those negotiations, Mr Kenny said: “Our aim is to engineer the IBRC promissory note by March, changing from a very expensive overdraft that needs to be paid down quickly to a cheaper, longer-term loan.”
The Government is hoping to have the deal concluded by the end of January or early February.
