Bank Recapitalisation in February – Fianna Fail duck the issue and leave the deal in jeopardy

Brian Lenihan and Michael Martin have decided not to recapitalise the banks by the end of February. This goes against the terms of the current agreement with the IMF/EU.

Lenihan and Martin claim to have received the approval of each of the institutions concerned for that decision: the IMF, the EU and the ECB.

Fine Gael believes this is not the case and we want clarification on this issue.

Until a new Government is formed in the week of the 9th of March, the current Government remains in office. Any decision on recapitalisation is therefore theirs and theirs alone.

A new government, hopefully with Fine Gael’s participation, will be formed in the week of the 9th of March. Within the following weeks a review of the solvency and liquidity of the banks will be completed.

Fine Gael in Government will await the results of that review before it puts any additional money into the banks. There are two reasons for this:

Firstly, we know that Bank of Ireland is seeking to raise money in the financial markets. If Bank of Ireland is successful in raising funds privately, it may reduce the amount required from taxpayers, or remove the need altogether for further recapitalisation.

Secondly, we are concerned that the Government’s decision not to recapitalise the banks now has been driven by its understanding that the hole in the banks is much bigger than it has acknowledged to date. If this is the case, any new Government will be duty bound to review its position on the banks.