Klaus Regling, head of the euro-area rescue funds, signaled he backs easier repayment terms for Ireland and Portugal, saying it may speed their return to financial markets.
The option being discussed for the two bailed-out countries only involves extending maturities, in contrast to Greece, Regling said in an interview with Spiegel magazine posted on its website.
“Unlike Greece, Ireland and Portugal want no suspension of debt servicing and interest payments, but rather only longer maturities on one part of their loans,” said Regling, who leads the permanent 500 billion-euro ($674 billion) European Stability Mechanism and the temporary European Financial Stability Facility. “That could help them to return earlier to the market. That in turn is in all our interests.”
Regling also reiterated that the ESM won’t provide aid directly to banks except as a last resort, and then only after the European Central Bank has assumed its new responsibilities as single bank supervisor for the euro zone. He said the ESM has more than 400 billion euros available for future rescue efforts, which could include direct recapitalization.
Euro-area nations are split on when and how they’ll allow direct aid to banks from the rescue fund. At a meeting of finance chiefs in Brussels this week, Ireland and France led calls for the new tool to be ready as quickly as possible, while Germany and Austria warned that direct bailouts won’t be widely available.
Dutch Finance Minister Jeroen Dijsselbloem, the new head of the finance chiefs’ group, said any decision to allow direct bailouts also should require host countries to have a stake in the rescue effort. He said the European Commission is drawing up draft guidelines that would prevent countries from pushing all risk onto European authorities.
`Skin in Game'
“The latest commission proposal now includes a provision that national governments have to contribute to a certain extent to bank recapitalizations,” Dijsselbloem told Dutch lawmakers in the Hague on Jan. 24. “It’s what they call ‘skin in the game,’ in other words you have to feel the heat. You have to continue to feel a responsibility.”
The bank-aid guidelines, which finance ministers aim to spell out in the first half of this year, might also have implications for countries that already have received bailouts. The Spanish government has served as an intermediary in an ESM rescue of its banking sector, and Cyprus is in the process of negotiating aid for both its government and its financial sector.