Noonan says 'Ireland now fit for competition'

Friday 06 December 2013 16.22
Finance Minister Michael Noonan was speaking at a Bloomberg event in London today
Finance Minister Michael Noonan was speaking at a Bloomberg event in London today

Finance Minister Michael Noonan has said that the country is now in a much better position as we exit the IMF/EU bailout programme.

Speaking at a Bloomberg event in London, the Finance Minister said that the country is "now fit for competition" again. He said the country will continue to follow the model of export-led growth it is currently pursuing.

Mr Noonan said that the country had made the right decision in exiting the bailout without a precautionary credit line. 

The Minister said that Ireland wanted to leave the "boom and bust cycle" behind it, and grow on a more sustainable level. 

Meanwhile, Mr Noonan said that he does not envisage an early sale of the 15% equity stake it holds in Bank of Ireland.

The Government sold a €1.8 billion preference share in the bank on Wednesday, triggering speculation it would turn its attention to selling its ordinary shares in the bank, which have more than doubled in value this year and now worth €1.2 billion.

"We'll hold onto it at the minute," Noonan told reporters in London. "We certainly won't be having any fire sales and I don't envisage an early sale."

Mr Noonan said he will "take time and see" what to do with the Government's 99.9% stake in AIB, which is probably worth between €5 billion and €7 billion, he said. 

He said he is still "hopeful" on the Government’s campaign to win retroactive recapitalisation of the banking system.

Mr Noonan said that the European Central Bank has agreed to use the results of an Irish review of the quality of the assets of its main lenders as part of pan-European stress tests.

The health of the country's banks the main concern surrounding the country's exit from an EU/IMF bailout this month and a lingering worry for investors.

"Two months ago I got agreement with Mario Draghi that we would be the first to do the asset quality review ... but that we wouldn't have to do it a second time. This would be taken as part of the European round of asset quality reviews," Noonan said today.

Mr Noonan also told the London event that he hopes Moody’s Investors Service will raise Ireland’s credit rating from non-investment grade as the country exits its bailout programme and plans debt sales.

"We’re hopeful that Moody’s will have another look at us early in the New Year. The mood from all the rating agencies is positive at present," he said.

Moody’s, which gave Ireland its top Aaa grade in 1998 before the euro was introduced, cut its rating on the nation to non-investment grade, or junk, in July 2011 after a property market collapse.

“Moody’s difficulty seems to be with the European Union and the euro zone, rather than with Ireland specifically,” Noonan said. “That’s what they’ve told us.”

A junk rating cuts out some money managers, whose investment criteria stop them buying low-rated securities. Standard & Poor’s and Fitch Ratings, rank Ireland at BBB+, three levels above non-investment grade.

Mr Noonan said Ireland will exceed its budgetary targets this year and the government has a cash buffer of more than €20 billion.

"We’re in a good place," he said. "We decided to exit the bailout and do it cleanly without any precautionary programmes or any dedicated credit lines. We’re not jumping out of the plane without a parachute. We have cash buffers in excess of €20 billion. That funds up to the second quarter of 2015 if we never entered the market," he added.