Eurozone finance ministers agree timeline for deal on Irish bank debt
A deadline has been set for finalising a deal on Ireland's banking debt.
The agreement was reached following a 9-hour meeting of eurozone finance ministers in Brussels overnight, at which agreement was also reached on assisting Spanish banks.
Finance Minsiter Michael Noonan had said he would be seeking confirmation from his EU counterparts for a timeline on the renegotiation of the Irish banking debt at the summit.
It has now emerged that ministers gave the green light to the European Commission to develop concrete proposals in relation to Ireland in September, with a final deal due to be done in October.
Euro area finance ministers also agreed early on the terms of a bailout for Spain’s troubled banks, saying that €30bn euro can be ready by end of this month.
The finance ministers for the 17 countries that use the euro as their official currency will return to Brussels on July 20 to finalise the agreement, having first obtained the approval of their governments or parliaments, eurozone chief Jean-Claude Juncker said early this morning.
As part of the agreement with Spain, finance ministers from all 27 European Union countries are expected to approve a one-year extension, until 2014, of Spain’s deadline for achieving a budget deficit of 3%.
There will be specific conditions for specific banks, and the supervision of the financial sector overall will be strengthened, Mr Juncker said.
“We are convinced that this conditionality will succeed in addressing the remaining weakness in the Spanish banking sector,” he said.
Dutch finance minister Jan Kees de Jager said the agreement should be finalised soon.
“We have a tentative deal on the bailout conditions for a bailout of Spanish banks,” Mr De Jager said.
“The total will likely be €100bn. Some countries like the Netherlands, Germany and Finland need to get parliamentary approval. We hope this can be wrapped up within a week.”
The exact amount of the bailout will likely not be known until September, when individual examinations of different Spanish banks have been completed.
Mr De Jager said Madrid’s partners agree that “financial sector reforms in Spain must be ruthlessly implemented. These reforms include notably a cap on salaries of bank executives and a ban on bonuses”.
However, he said a system of EU-wide banking supervision still needs to be worked out.
“There are still differences over this,” he said. “The details will be worked out by the end of the year.”
