Noonan Says ESM Deal on Bank Debt No Longer as Attractive

Irish Finance Minister Michael Noonan said his government’s campaign to sell stakes in Irish banks to the euro-area bailout fund is less of a priority now that the holdings are worth more.

A deal with the European Stability Mechanism “is not as attractive a deal any more because our bank shares have become very valuable,” Noonan said in an RTE Radio interview today.

A gradual sale of shares in 99.8 percent state-owned Allied Irish Banks “over time to the market” is probably a better way to lower state debt, Noonan said. He predicted the Irish deficit would fall to 4 percent this year, well below the government’s 4.8 percent target.

Euro-area officials have signaled that any kind of deal would be politically difficult, while not ruling out the possibility of a bank debt deal with Ireland. Dutch Finance Minister Jeroen Dijsselbloem, who leads the currency bloc’s finance ministers’ group, said in June that “the possibility of retroactive use is left open” in the ESM toolbox.

Noonan will travel to Brussels next week to seek support for Ireland to repay its IMF loans early, before heading to European Union finance ministers’ meetings in Sept. 12-13 in Milan. He’ll meet with Dijsselbloem and ECB President Mario Draghi on the issue, according to an Irish finance ministry spokesman.

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