* Ireland not looking to sell equity until banks cut costs
* Noonan promises easier budgets unless disaster strikes
DUBLIN Feb 28 Ireland's government wants its
mostly state-owned banks to further cut costs before it sells
them in full, something it is not yet minded to do, finance
minister Michael Noonan said on Thursday.
Ireland has slowly begun to cut its exposure to the banking
sector after a property crash that ravaged the economy forced it
to pump 64 billion euros ($83 billion) - or around 40 percent of
annual economic output - into its stricken lenders.
Noonan reiterated that he is prepared to offload some debt
at the right price in state-owned Allied Irish Banks
and Permanent TSB, similar to the sale of contingent
capital in Bank of Ireland that last month recouped 1
billion euros for the state.
However he said he would not rush into anything beyond that
until he saw leaner cost bases at banks that have already cut
thousands of jobs and shrunk their balance sheets under the
terms of Ireland's EU/IMF bailout.
"On the equity in the two banks and the 15 percent in Bank
of Ireland, I'm not disposed to put that on the market because I
don't think we'll get full value," Noonan told parliament.
"I want to build up the values in the banks, cut their cost
base so what the state holds becomes more valuable."
The IMF, one of Ireland's so-called "troika" of lenders,
said in December that the reduction in average staff count per
bank branch to 29 from 35 following widespread redundancies and
branch closures may still be insufficient to reduce operating
costs as much as needed.
Ireland hopes it will ultimately not have to wait to sell
its banks to private investors but that Europe's new rescue fund
will first take stakes off its hands, however some euro zone
creditor countries are reluctant to allow precious rescue funds
be used in such a retrospective manner.
Dublin has turned its attention to this issue after striking
a key bank debt deal with the European Central Bank earlier this
month to ease the country's debt burden.
The government has promised voters less austerity over its
next two budgets as a result of the deal and Noonan said on
Thursday that unless something disastrous happens, the public
would see a benefit between now and 2015.
He had appeared to take a step back last week when he said
that it was too soon to say for sure what the leeway would mean
for next year's budget amid calls from the country's central
bank governor and EU Economic chief Olli Rehn for Ireland to
stick to its fiscal targets.