THE DECISION of Minister for Finance Brian Lenihan to defer the recapitalisation of the banks until after the election has been criticised by the Opposition.
Fine Gael finance spokesman Michael Noonan said the move “looks like a classic Fianna Fáil political stroke to ensure they are not announcing bad news which would aggravate taxpayers in the last week of the election”.
Mr Noonan said that even if Mr Lenihan was given the benefit of the doubt he should explain how a deal which he said could not be renegotiated in any respect could now be departed from unilaterally.
“This announcement is not about a minor matter. It is a condition of the bank restructuring section of the bailout deal that the Tier 1 capital ratio of the bank in question should be brought up to 12 per cent by the end of February 2011. This is not happening, yet the Minister has not provided an adequate explanation.”
Mr Noonan said that while it could be argued that the stress testing of bank liquidity and solvency would not be completed until March 31st whatever the result of the stress tests, they will have very little effect on any of the banks, other than Bank of Ireland.
“Bank of Ireland is the only Irish bank which has any possibility of raising private capital, but it cannot do so until the results of the stress test are announced in March. It may then be in a position to raise private capital after this announcement.
“It would therefore have been far better for Brian Lenihan to defer the recapitalisation of Bank of Ireland, and to proceed with the other recapitalisations at the end of February,” said Mr Noonan.
He said that apart from the special case of Bank of Ireland, Fine Gael was forced to conclude that Mr Lenihan’s announcement was motivated by political considerations rather than a prudent handling of banking policy.
Labour Party finance spokeswoman Joan Burton attacked Fianna Fáil and Fine Gael.
“I would trust and hope that Fianna Fáil is not playing some kind of electoral politics on these grave issues. What are we to make of today’s announcement by Minister Lenihan that he is postponing the next round of capital injections until after polling day?” she asked.
Ms Burton accused Fine Gael of shedding “pre-election crocodile tears for Irish taxpayers” which she said was a bit rich considering they voted to give bondholders a free lunch through the blanket bank guarantee. “It shouldn’t be forgotten that their finance spokesperson, Michael Noonan, was quoted as recently as last October saying that it was not worth risking the reputation of the country by negotiating with senior Anglo bondholders,” she said.
