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Regling endorses Irish bailout exit

Wednesday, December 04 16:44:11

The head of the EU's permanent bailout fund has said Ireland was "right" to exit the bailout without a precautionary credit line.

Klaus Regling, the managing director of the European Stability Mechanism (ESM), said market reaction to the Government's decision showed it was the correct one.

He told RTE News: "I think the reaction from the financial markets indicates it was the right decision, because they are very happy. Interest rates have dropped further after this decision by the Government, and I think they have good reasons."

Mr Regling was making his remarks as the predecessor to the ESM, the European Financial Stability Facility (EFSF), issued its final instalment of the EU element of Ireland's bailout. The final tranche is worth E2.27 billion.

Asked if Ireland might access some of the ESM's E500 billion facility to compensate for the recapitalisation of Irish banks following the property market collapse, Mr Regling said it would be "difficult" since any provision for retroactive recapitalisation would require a change in the ESM treaty.

That in turn would need ratification by 17 euro zone parliaments, including the Bundestag.

However, he told RTE that if agreement was reached then the idea that the ESM could take an equity stake in the pillar Irish banks, Bank of Ireland, AIB and Permanent TSB, was "possible."