Ireland's Noonan: Markets Still Wait Convincing Solutions To Crisis

Date : 11/27/2011 @ 9:56AM
Source : Dow Jones News

Ireland's Noonan: Markets Still Wait Convincing Solutions To Crisis

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International markets are still waiting for Europe's leaders to agree credible solutions for the euro-zone debt crisis, Irish Finance Minister Michael Noonan said Sunday.

And because of the market turmoil surrounding the euro area, he said the Irish government will need to inject about EUR1.3 billion to complete the recapitalization of Irish Life & Permanent PLC (IL0.DB), a now-nationalized lender, after talks to buy out its life business fell through.

Advanced talks with the preferred bidder, Canada Life Assurance Co., collapsed last week because of the turmoil involving users of the common currency, including a credit rating downgrade for Belgium and the failure of Germany to sell part of its debt at an auction, Noonan said.

"Internationally, every body in the money business is waiting for a European solution that is convincing. And that hasn't been forthcoming yet," he told Irish broadcaster RTE Radio.

He also said his 2012 budget to the Irish parliament when he will detail EUR3.8 billion in spending cuts and tax increases will for the first time be extended over two days, on Dec. 5 and Dec. 6.

Noonan is obliged by Ireland's bailout lenders, the European Union and International Monetary Fund, to reduce a budget deficit of about 10.3% of gross domestic product this year to 8.6% of GDP in 2012.

Amid its deep banking crisis, saving Irish banks has cost Ireland about EUR63 billion, equivalent to 40% of the country's annual economic output. Such huge costs forced the Irish authorities in November last year to tap international bailout loans from the EU and IMF.

Irish Life, once Ireland's largest pensions and home loans provider, is one of six Irish lenders that have required huge amounts of government aid to keep them from collapse amid the crisis.

The government has already injected EUR2.7 billion into Irish Life and effectively owns the firm outright. It had hoped to raise over EUR1 billion from the sale of the life unit to Canada Life and thereby complete the EUR4 billion recapitalization that the heavily loss-making group needs.

Noonan said Sunday he was confident that Irish Life won't require more government aid.

-Eamon Quinn, Dow Jones Newswires; +353 1 6762189; eamonquinn@dowjones.com

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