The European Commission has said stress tests of Irish banks should convince markets that there will be no more surprises from the sector.
Commission spokesman Amadeu Altafaj noted that the capital needs of Irish banks of €24 billion revealed by the tests, were comfortably covered by the €35 billion earmarked for Irish banks in the EU/IMF bail-out plan.
'With the clear vision presented yesterday in terms of restructuring the banking sector, we think it should convince and should reassure market participants that there will be no further surprises,' Altafaj told reporters.
A senior official from the European Investment Bank has said the measures announced by the Government yesterday are 'very thorough' and will do a lot to renew international confidence in the Irish banking system.
Plutarchos Sakellaris, European Investment Bank Vice President responsible for operations in Ireland, said it was important that the Irish Government met its obligation to carry out a stress test of banks here.
A delegation from the EIB is in Ireland to meet the new Minister for Finance and others in order to match its lending programme to national development priorities.
Noonan defends buden sharing stance
Finance Minister Michael Noonan has said that Fine Gael had not gone back on its election promises and that it is in favour of burden sharing.
He said the party's policy remains for three parties to pay back the debt - the Irish taxpayer, the European taxpayer and the creditors. He said the situation had been moved to a point where significant savings on the €24 billion would be secured from subordinate debt holders.
Mr Noonan said the majority view in the European Central Bank in Frankfurt is that senior bond holders should not be touched. He said that given the fact that Frankfurt is providing almost €200 billion of liquidity to the Irish banking system, the Government has agreed not to enforce burden sharing unilaterally.
He warned that there may be a downgrade of Irish banks from the rating agencies but banks will continue to trade.
Mr Noonan denied that Europe has treated Ireland badly and said that Europe has been very good to Ireland and provided billions of euro to enable people to keep cashing their pay cheques.
He added that Ireland's credibility has suffered because there have been so many claims in the past that did not come to pass and that restoring Ireland's credibility was now crucial.
He said for the first time Ireland has received - in writing - a commitment from Europe that funding would be ongoing.
Mr Noonan said that for the first time in a long time Irish banks are secure and that Ireland can not be rebuilt without fixing the banks and providing credit to the country. He warned that it would be a slow process but it could be done.
The Finance Minister said that while similar promises have been made in the past they were not backed up by action, whereas the new Government had already put structures in place and taken steps to change the banking structure.
Mr Noonan said the best Ireland could hope for has come to pass and a commitment to lend to Ireland at 1% was a huge achievement that would keep the banks going forward.
He said the Irish taxpayer has had a very large burden place unfairly on its shoulders but the latest development should not increase the burden because the quantum of debt had not increased.
McCarthy says stress tests 'holding operation'
Economist Colm McCarthy has said the Government has inherited a very difficult situation and what it has undertaken with the central bank is a 'holding operation'.
Speaking on RTÉ radio, he said the country has been drained of liquidity and the banks can not borrow in the market. He added that the crisis had been caused by the perception that neither the banks or the Government were solvent in the long term.
He said the current agreement is a 'finger in the dyke' exercise and there has been no agreement at a European level to address the issue of sovereign debt that afflicts Ireland and other European countries.
Mr McCarthy said there was no 'one shot' solution to the problem.
He said he would have preferred if the Government had been able to do a compromise with the creditors of the banks but the blanket guarantee issued in 2008 meant that the Government was not able to look properly at a compromise with senior bond holders.
He said he believed the Government will get some relief on the interest rate it has borrowed on over the coming years.
