Bonds News

HIGHLIGHTS-Comments by European Union finance ministers

BRUSSELS, Sept 7 (Reuters) - Following are comments by European Union finance ministers and other officials who met on Tuesday for a second day of talks on EU budget reforms.


“All deposits in Irish banks will continue to be guaranteed until the end of this year.”

Commenting on the extension of guarantees beyond September: “We don’t want to see the Irish financial system on a cliff on the 30 September.”

Asked about Ireland tapping the European stabilisation fund, he said: “I don’t anticipate that at all. The markets have remained open to Ireland. What I anticipate is going to the markets and borrowing in the ordinary way. The question of the stabilisation fund wasn’t raised (in talks with officials in Brussels).”

Commenting on the future of Anglo Irish Bank: “We will have to bring finality to the strategic direction of the bank. Remember the bank has not been open for lending since it was nationalised.”

“The government appreciate the urgency of this. These difficulties will be addressed in a matter of weeks.”

“We do need to hold our nerve and identify losses and show how these can be worked out over a period of time.”

Commenting on Anglo, he said: “The problems at Anglo were somewhat larger than originally anticipated because Anglo is carrying the load of the Irish difficulties.”

“You can’t have a fire sale of banking assets and an immediate liquidation of a bank. It has to be over time if you are working out an institution. The work out ... will take place over time.”

Asked about restructuring of the bank’s debt, he said a guarantee on Anglo’s subordinated debt would end on the 30 of September.

“At that stage, it is open to government to review where we go. Already there have been debt management exercises in relation to part of that subordinated debt.”

“It is open to the government to decide what is appropriate. The bank already engaged in a debt liability exercise with subordinated debt which led to a substantial reduction in the value of the debt.”


On Greece:

“We are happy that Greece is on a good track.

On Slovakia:

“We expressed the view that Slovakia refusing to be part of the Greek package is totally unacceptable.”


On EU Commission proposal for bonds to raise funds for infrastructure projects:

“I am in favour of us not losing sight of realistic goals and not always making proposals that are quixotic from the view of the member states.”


On bank levy:

“Several countries are taking the initiative to put a tax on the banking sector. I am thinking of course of France, Germany, Britain but also other countries like the Netherlands, Austria and Spain.

“France, like Britain and the Netherlands, does not wish to put this tax, which will take effect in the 2011 budget, in a special (crisis) resolution fund.” “We wish to avoid insurance mechanisms which could allow banks to avoid their responsibilities.”

“We prefer that the tax goes directly to the state budget.”

“There are still issues to be resolved, notably on double taxation.”

On financial transactions tax:

“It is technically feasible, practically difficult, politically desirable and financially uncertain.”

“Countries like France, Germany, Austria and Greece are looking at this proposal with great interest, and are favourable in principle, especially if we can extend it to all the G20 countries and preferably more widely ... to avoid arbitrage risks.”

“We asked the Commission to deepen its studies on this, especially on the question of the impact of the financial transactions tax on competitivity in the European Union.”


On supervision:

“We have a deal which is good for Britain.”

On budget review plans:

“It is in everyone’s interest that we have transparent information about other national budgets. We welcome new procedures.”

“It is up to national governments and parliaments to decide what should happen to the revenues from those (bank) levies. I made it clear that we did not support proposals for a European resolution fund to supersede what we put in place in the UK.”

On financial transaction tax:

“It is very difficult to see how in practice you could make a transaction tax operate in a world in which capital markets and financial activity can move very quickly to jurisdictions outside the European Union.”

On annual British rebate from EU coffers:

“We are not going to give way on this at all.”


On pension reform:

“We take the issue seriously and we are looking forward to continued discussions of this issue in the Task Force. For us, the opinion of the member states is crucial as you know. Any change in the European accounting standards would require the consensus of all member states, and therefore I want to listen to them very carefully and listen to all arguments as it is a consultation process. Having said this, I want to underline the importance of maintaining clear and rigorous fiscal rules in the stability and growth pact.”

On talks with Slovak Finance Minister Ivan Miklos:

“We discussed the conditional support package for Greece and I underlined how important it was. It was actually the crucial decision at the critical moment to safeguard financial stability in the euro area, including Slovakia. And of course we expected, as is normal in the EU, that the EU member states -- in this case all of the euro area member states -- will respect the commitments they have undertaken by unanimity.

“As regards the impact of this to the loan package and payments to Greece, since Slovakia is not particpating in the loan package so far it means the other 14 will cover the share of Slovakia in this context. I think it is important to underline the importance of solidarity of each and every member state towards the other member state of the euro area. It is a matter of the euro area as a whole and we are all in the same boat.”


On possible financial transaction tax:

“My view remains that there is no certainty of this but there is a chance of this (happening).”

On Basel III bank capital and liquidity rules:

“We want a tightening of the rules ... (but) the financial sector must be in a position to continue to carry out its business.”

On EU pension accounting proposal:

“We are always ready to talk ... We will find a solution together ... I am not pessimistic.”


On bank levies and taxation on financial transactions:

“There was discussion ... on one side about the bank levy and on the other side the taxation of financial transactions. I must confess that there is no unanimity for the moment.

“First of all for the bank levy, we have a lot of guidelines for the work to do in the Commission and in the economic and finance committee and then in the Ecofin ... while the taxation on financial transactions, that is more complex. It will be necessary to have a discussion with all the partners in the G20 about that ... but it was important to start the discussion.”

On Anglo Irish Bank:

“We follow the situation. We’ll maybe have more discussions on that in the eurogroup during the afternoon, but not only about Ireland about the situation in the whole eurozone.”

“But we are following that with all the member states in the eurozone and with the Commission, and I’m sure if there are some need to do something we will say that after the meeting of the eurogroup or after the next meeting.”


“The common view appears to be that the financial sector should make a clear and substantial contribution to the costs of the economic crisis.”

“We discussed the advantages and drawbacks of tax instruments with regards to their revenue potential and economic effects. While use of potential tax instruments differs, there is interest in going forward with the work on this issue.”


On Slovakia:

“Slovakia had agreed to this. The new government in Slovakia has reneged on this agreement. This is not acceptable. We will pursue discussions. We want that Slovakia take their responsibilities more seriously in the future.

On a bank levy:

We are going ahead and will introduce a bank levy as part of our budget consolidation. We want to have a financial transaction tax. There are a lot of questions to be cleared up. It is important that as many countries, if possible all, in Europe take part. The bank levy should come into the national budgets. It should be a national responsibility.”


“We don’t want to see a new transaction tax. The banking levy is more suitable as it would bring us revenue to deal with future crises. Obviously, we need sanctions, this is key, we need to make more rapid progress on that.”


“I think it’s important to underline that while we have stabilised the situation in the spring and during the summer concerning financial stability in the euro area, we are certainly not out of the woods yet and that calls for strong solidarity and strong commitment by all euro area countries with respect to the euro area and the euro.”