Ireland mulls asking for money for banks, not state: report

DUBLIN (Reuters) -Ireland is considering asking for money for its banks from the European Union’s emergency fund in a bid to fend off a threatened bailout for the state, the Irish Independent reported on Monday, quoting an unnamed source.

EU sources have told Reuters over the past two days that talks on a possible bailout were under way and that Ireland, with borrowing costs rocketing, was unlikely to hold out without assistance.

Ireland did not rule out the possibility that it may have to turn to the European Union for help in dealing with its debt crisis on Sunday as its officials hold discussions with European counterparts.

The Irish Independent said Finance Minister Brian Lenihan may ask his European counterparts in Brussels on Tuesday if it would be possible to funnel funds into Irish banks which he has already promised to pump up to 50 billion euros ($68.38 billion) into.

“There is no question about Irish sovereign debt - the question remains about the funding of the banks. The banks are having trouble getting money,” the newspaper quoted the source as saying.

“We have to find out - could you go to the fund and get money for the banking sector. Lenihan at ECOFIN presents an opportunity to discuss it. It would be the banks that would have to pay it back - not the state.” The total amount of outstanding European Central Bank loans owed by Irish banks rose to 130 billion euros as of Oct 29 from 119 billion on September 24, data published on the Irish central bank’s website showed on Friday.

Reporting by Padraic Halpin