Ireland should be 'specific case' on bank debt: France

(PARIS) - French President Francois Hollande said Monday that Ireland's handling of its banking debt crisis should be considered as a special case distinct from the rest of the eurozone debt crisis.

"Ireland is a specific case and deserves to be regarded as such," said Hollande, who met with Irish Prime Minister Enda Kenny in Paris.

"And this is the position that France and I also know Germany will adopt in regards to the situation in Ireland," he said. "And the eurogroup will need to take this dimension into account."

Kenny said Ireland was a special case because it was the "first and only country which had a European position imposed upon it, in the sense that there wasn't the opportunity... (of) burning the bondholders."

"The Irish public and the Irish taxpayer were required therefore to service the full extent of that debt. Which is the situation that we are trying to reduce," he said. "In those circumstances, Ireland's case is different and therefore special."

On Sunday Kenny had met with German Chancellor Angela Merkel to discuss ways to decouple the problems of banks in Ireland from its sovereign debt.

Dublin had hailed an accord at the EU summit in June as offering a way of getting billions in bank bad debt off its books, thereby strengthening its public finances and allowing itself some leeway to stimulate the economy.

However Merkel said after another EU summit last week that ailing Spanish banks could not benefit retroactively from a direct bank recapitalisation by the eurozone's bailout fund, comments that spooked many in Ireland.

Ireland had to seek an EU-IMF bailout in late 2010 after government efforts to keep its banking sector afloat left it virtually bankrupt, forcing it to seek outside help in return for tough and unpopular austerity measures.