Ireland may miss Oct deadline for full bank debt deal
DUBLIN, Sept 7
DUBLIN, Sept 7 (Reuters) - Ireland may miss next month's deadline for a decision on easing the terms of its costly bank bailout after its central bank governor said on Friday that there were "sequencing issues" to parts of the deal.
Euro zone leaders agreed at their summit in June to look at improving Ireland's bank rescue package and EU Economic and Monetary Affairs Commissioner Olli Rehn set a deadline of October to reach a decision on the matter.
Irish central bank chief Patrick Honohan indicated this timetable may prove too ambitious for all aspects of the deal.
But he said he expected to get "some results" from the talks, and analysts said it mattered little if there was a delay.
"The decisions in June related to Spain and then, if you like, to a read-across into Ireland so there is going to be a sequencing issues before you can actually see that all finalised," Honohan told reporters.
"There are discussions going on, they are continuing and I expect they will have some results... I'm not putting a timetable on it."
Honohan was referring to the part of the deal that would benefit from an agreement to allow European rescue funds to recapitalise banks, something Dublin wants to benefit from retrospectively after pouring billions into its lenders.
The mechanism for delivering on this agreement depends on how long it takes Europe to set up a banking supervisory body, with Germany and the European Commission seemingly at odds over how a new banking union should operate.
TIMING NOT KEY
Ireland's finance minister will meet his counterparts in France, Germany and Italy next week as he steps up his push for a deal, and his spokesman said on Friday that work was ongoing at official and ministerial level to meet the October timeline.
Dublin has been chiefly concentrating on easing the burden attached to 31 billion euros of high-interest IOUs put into the failed Anglo Irish Bank, or IBRC as it is now known, an aspect of the deal that is independent of what happens in Spain.
Analysts said it ultimately mattered little if this part of the solution was worked out by October given the commitment alone has been enough to push Irish bond yields down sharply and allow Dublin to raise long-term debt for the first time since it secured an EU/IMF bailout almost two years ago.
"I don't think the actual timing of delivery is as important as the commitment to deliver," said Donal O'Mahony, global strategist at Davy Stockbrokers.
"...Meanwhile there are other parts to the deal, what we have been fighting over for ten months is an alternative funding mechanism for the wind-down of IBRC, this is independent to the Spanish banks and could conceivably be signed off on over the next six weeks."
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