A decision on whether Ireland can recoup some of the E32bn it put into rescuing its banks should be made this week when eurozone finance ministers meet in Luxembourg.
They will discuss the role of the European Stability Mechanism – the EU’s rescue fund – in recapitalising banks in a step towards preventing bank failures and rescues affecting the sovereign in future.
No firm decision has been made yet, according to a senior EU source, on the thorny issue of retroactive banks funding – which Ireland has been pushing for.
There is a reference to it in the documents that will be before the ministers, which they will discuss. The expectation is, according to the sources, that they will agree that retrospection can be allowed in exceptional circumstances.
However there will be no blanket agreement to this, and the issue is likely to be left up to the ESM board to decide on a case by case basis.
The amount of money expected to be set aside in the ESM fund for bank recapitalisation is likely to be relatively small – around E70-E80bn.
With Spain having a possible claim on retroactive funds for its banks, many member states were against allowing such a move fearing it would reduce the fund too much.
However Ireland has been pushing for this feature to be included and has gained the support of the IMF in this. Source: The Irish Examiner