ST. GALLEN, Switzerland, May 2 (Reuters) - Ireland will not allow its banks to be treated differently to others in Europe and will resist pressure from Brussels to conduct stress tests earlier than its euro zone peers, Finance Minister Michael Noonan said on Thursday.
Ireland identified a large capital hole in its banks in 2011 when it conducted its own set of stress tests that were seen as more rigorous than those carried out by the European Banking Authority (EBA), but Dublin now wants to align its next check up with the EBA, even if that pushes them out to next year.
However the European Commission said in its latest review of Ireland’s bailout progress last month that a credible stress test for Irish lenders was essential before the bailout ends later this year to ease the uncertainty around asset quality.
The Commission, one of three lenders overseeing Ireland’s bailout, stressed that Ireland should run another rigorous set of its own tests rather than wait and do so as part of the EBA’s exercise.
Noonan indicated he was still resisting that, despite some signals to the contrary from his central bank governor Patrick Honohan.
“We want to normalize our system in Ireland. Stress-testing normalization would be to align it in close proximity with the European stress test system,” Noonan told Reuters on the sidelines of a conference in Switzerland.
“If that is in the autumn, we’ll do it in the autumn, if that’s not until next year, we’ll do it next year. We don’t want to be seen any longer as a special case.”
The head of state-controlled Allied Irish Banks, one of three domestically-owned lenders left standing following the near-collapse of the sector, backed Noonan’s position this week, saying it would have a clearer picture on problem mortgages next year.
Honohan said on Tuesday that no decision had been made yet on the timing but that for the moment, he was working towards overseeing the stress tests in the latter part of this year.