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Ireland's Finance Minister Michael Noonan at the Eurogroup meeting in Luxembourg. (AP Photo/Geert Vanden Wijngaert)

Euro finance ministers agree direct help for banks

The 17 eurozone ministers are joined today by their 10 non-euro colleagues to discuss these issues in a Bank Recovery and Resolution Directive.

EUROZONE FINANCE MINISTERS moved closer towards a ‘banking union’, agreeing how the bloc’s rescue fund can provide new capital to failing banks so as limit the damage to the wider economy.

“We have made an important step … towards the banking union by agreeing on the main principles for the future rules of direct bank recapitalisation,” German Finance Minister Wolfgang Schaeuble said after talks with his 16 eurozone peers.

At the height of the debt crisis, the EU set up the €500 billion European Stability Mechanism to bail out member states. In June, when Spain’s banks looked near to collapse, Brussels extended its scope to allow direct aid for struggling lenders.

The problem however was how this was to be done, as Germany among others warned against allowing countries to simply get their banks bailed out at the ESM without strict conditions.

Schaeuble made the point again Thursday.

Ireland’s Finance Minister Michael Noonan greets Greece’s Finance Minister Yannis Stournaras during a Eurogroup meeting in Luxembourg. (AP Photo/Geert Vanden Wijngaert)

“If some think that a bank in need of capital can just go to the ESM, that is nonsense,” he said, describing such action as “a last resort.”

Dutch Finance Minister Jeroen Dijsselbloem, who heads the eurozone finance ministers group, said the ESM will be limited to providing €60 billion in all to lenders, relatively small given the size of some recent bank bailouts.

The member state involved will also have to ensure that the bank seeking aid has a minimum 4.5 per cent capital buffer and make up the difference if not, and then must make another contribution in due course, Dijsselbloem said.

Crucially, bank creditors, including depositors, will be ‘bailed-in’ in any such rescue, to minimise the cost to the taxpayer who has so far funded the debt crisis bailouts.

This facility “will help preserve the stability of the euro area,” Dijsselbloem said, stressing how it will get to the crux of the problem by saving the banks without loading additional debt onto strained governments.

The ESM bank recapitalisation role is tied to the Single Supervisory Mechanism (SSM) agreed last year which centralises regulatory oversight of the eurozone’s largest lenders under the European Central Bank.

Once in place, expected initially in March next year but now likely to be somewhat later, the ESM can begin its recapitalisation work.

The SSM, the first step towards banking union, is supposed to be backed up by a Single Resolution Mechanism, which would close down failing banks, and then a deposit guarantee system to reassure nervous investors their money is safe.

The 17 eurozone ministers are joined today by their 10 non-euro colleagues to discuss these issues in a Bank Recovery and Resolution Directive, which if approved will then be negotiated further with the European Parliament.

The president of the Eurogroup Jeroen Dijsselbloem talks with Finance Minister Michael Noonan in Luxembourg. (AP Photo/Geert Vanden Wijngaert)

Those talks promise to be difficult, diplomatic sources say, with some countries anxious to get a measure of flexibility, especially on the controversial bail-in provisions.

A controversial Cyprus rescue in March bailed-in larger savers in its two biggest banks to pay for their restructuring, setting what Disjsselbloem said at the time could be a model for later bailouts.

The finance ministers also discussed the increasingly uncertain situation in twice-bailed Greece, amid reports its latest programme is in trouble.

Both Dijsselbloem and EU Economic Affairs Commissioner Olli Rehn voiced concern at the latest developments in Athens, with the Greek coalition government at risk after a decision to close the state broadcaster sparked popular outrage.

“I appeal to the sense of responsibility of political leaders in Greece for the sake of Greece and of Europe,” Rehn said.

Dijsselbloem insisted that the Greek bailout was on course and properly financed, but added that it was urgent that its creditor Troika of the EU, ECB and the International Monetary Fund complete a review report by early July.

The ministers also formally endorsed Latvia’s accession to the eurozone as its 18th member from January, in what one EU source described as a “very positive” sign of confidence in its future after so much upheaval.

- © AFP, 2013

Related: Noonan: Ireland will escape bailout, even if we can’t recover bank costs>

More: EU faces talks on bank sector reform and who should pay for future bailouts>

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    Mute Liam Doyle
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    Aug 9th 2018, 9:16 PM

    The display picture on this article led me to believe I was going to enjoy a new opportunity to see Jason Statham be constantly angry and suspicious while just generally being hard, but charming, and shirtless, often unnecessarily shirtless. I’m therefore disappointed with the options provided.

    71
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    Mute Harry Whitehead
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    Aug 9th 2018, 9:20 PM

    @Liam Doyle: You’d have liked Kevin Bishop’s great idea for a Jason Statham flick called “The Puncher” where he spends the whole film constantly having to swing his fists and hit anything he comes into contact with (including his little girl when he rescues her at the end) – unfortunately the link is blocked by Channel 4.

    16
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    Mute Shougeki
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    Aug 9th 2018, 10:33 PM

    @Harry Whitehead: Crank is his best. And still the ringtone on my phone. Albeit when he see’s jackasses stealing his car and goes out “This is a hurl. From an ancienct gaelic game that is a cross between hockey and murder” was pretty awesome too.

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    Mute Harry Whitehead
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    Aug 9th 2018, 11:47 PM

    @Shougeki: LOL forgot about Blitz.

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    Mute Felicity Hensen
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    Aug 10th 2018, 3:00 AM

    @Shougeki: Thought that quote was so good I had to rewind the film so I could write it down!

    4
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    Mute Ron Noco
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    Aug 9th 2018, 9:54 PM

    Going to cinema these days isn’t special anymore… someone always checking their phone , others arrive late, and no matter where you sit you’ll be annoyed by someone hopping of the back of your seat asking to pass for constant trips to the toilet

    40
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    Mute Luke McDermott
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    Aug 9th 2018, 9:55 PM

    @Ron Noco: too many comic book films as well imo.

    36
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    Mute Seán Domhnall O'Sullivan
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    Aug 9th 2018, 10:30 PM

    @Ron Noco: I have no issue telling people to shush. If u want to chat not in an emergency ,please leave the cinema.

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    Mute shanekeogh
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    Aug 9th 2018, 9:23 PM

    Ha comments closed because the journal doesnt do truth, shame on you lot, a news story needs truth

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    Mute Paul Furey
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    Aug 9th 2018, 11:58 PM

    @shanekeogh: And….the truth is??

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    Mute shanekeogh
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    Aug 10th 2018, 12:04 AM

    @Paul Furey: the traveller woman dragged her 6 kids to sleep in a garda station, while shes on fb last few days with boxes of drink, buying waterford crystal, offer 10,000 few weeks ago for a seven seater, 3 weeks ago she was delighted she got housed in tallaght by the council, but then refused it because it was the hap scheme, and she has a partner

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    Mute Frank O'Connor
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    Aug 9th 2018, 10:57 PM

    How can someone be let out on bail when they are charged with murder? What a country we live in. Absolutely farcial.

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    Mute Seriously stunned
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    Aug 10th 2018, 8:48 AM

    @Frank O’Connor: which movie is that?

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    Mute White Rhino
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    Aug 9th 2018, 8:36 PM

    What happened to great storytelling…all these movies are rubbish. Go to the cinema now it’s “I see stupid people”

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    Mute Conor Paddington
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    Aug 9th 2018, 8:49 PM

    @White Rhino: what’re you talking about? The Meg is this generation Citizen Kane.

    62
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    Mute Conor Paddington
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    Aug 9th 2018, 8:51 PM

    @White Rhino: its only shortcoming is the absence of Rock “the Dwayne” Johnson.

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    Mute Harry Whitehead
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    Aug 9th 2018, 9:35 PM

    @Conor Paddington: You forgot Vinnie ‘I’m the Juggernaut, bitch!’ Jones.

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    Mute Seán Domhnall O'Sullivan
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    Aug 9th 2018, 10:28 PM

    @Conor Paddington: i agree. The world needs these films .while baffling and scientifically absent ,my personal fave is Sam Andreas. Tsunamis, quakes and a bizarre Kylie cameo ..plus when Rocko saved his daughter was actually surprisingly moving. Great mess of a film.

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    Mute Seán Domhnall O'Sullivan
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    Aug 9th 2018, 11:17 PM

    @Harry Whitehead: I met Jones in Kemare Co. Kerry. Rude abrupt and bully ish, I will add that I was just a nipper.

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    Mute Harry Whitehead
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    Aug 9th 2018, 11:50 PM

    @Seán Domhnall O’Sullivan: “Oi, Kemp…you been tellin’ the extras you’re ‘arder than me?”

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    Mute Garrett Colreavy
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    Aug 9th 2018, 10:20 PM

    The meg tommorow afternoon

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    Mute Seán Domhnall O'Sullivan
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    Aug 9th 2018, 10:25 PM

    Totally gonna look up the bizarre and awesome ‘ghost shark,’ ahead of this The Meg business. Could not be more ridiculous than Sharknado but is it remotely on the same level ?

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