Deal on Irish bank debt is EU presidency priority

(DUBLIN) - Dealing with the scale of the Irish banking debt is a priority of Ireland's EU presidency, Prime Minister Enda Kenny said Wednesday.

"While you have a duty of responsibility in terms of the European agenda we have not lost -- and will not lose -- sight of our immediate requirement which is to deal with the question of the scale of our bank debt. And that is a priority for Ireland's presidency," Kenny said.

Kenny was speaking at a joint press conference with EU President Herman Van Rompuy during his one-day visit to Dublin at the start of Ireland's six-month stewardship of the 27-nation European Union.

Dublin is lobbying the European Central Bank (ECB) to restructure 31 billion euros ($40.4 billion) in promissory notes -- effectively IOUs -- that were used to rescue the former Anglo Irish Bank.

Kenny is hopeful that a deal can be struck before March when the next payment of 3.1 billion euros is due to be made.

Last March, Kenny's government issued a long-term bond to avoid the immediate payment of the instalment, alleviating financial pressure on the bailed-out eurozone nation.

"What we want to do is focus on the immediacy of the promissory note question with the ECB (and then) discuss the European question of legacy assets and legacy debts and the decision to break them up between sovereign and bank debt," Kenny told reporters at Dublin Castle.

The defunct bank, now known as the Irish Bank Resolution Corporation, was one of the most reckless lenders during the Irish property boom of the last decade.

While Van Rompuy said he was not party to the debt discussions he did voice hope for a positive outcome.

"I understand that the European Central Bank and the Irish authorities continue to work hard to find a mutual, acceptable arrangement. And I hope, I really hope, for a positive outcome," Van Rompuy said.

Dublin published its official presidency programme Wednesday, with its agenda focusing on jobs, stability and growth as well as a way to deal with Europe's place in the wider world.

Ireland hopes to be first eurozone nation to exit a bailout programme and it passed a key milestone Tuesday when its return to the syndicated bond market for the first time since the 2010 bailout was greeted enthusiastically by international lenders.

The 2.5-billion-euro ($3.26 billion) sale was three times oversubscribed.

However, Kenny warned that Ireland still requires the support of the EU to leave the 85-billion-euro EU-IMF bailout scheme it entered in November 2010.

"We have to exit the programme efficiently and for Ireland to exit the programme we need the support (of Europe) and we expect to get that," he told reporters at a briefing.

Van Rompuy also said he was hopeful of reaching a deal on the EU's disputed 2014-2020 budget by February after talks broke down at an EU summit last November.

"The November Council didn't end in a failure. We had no agreement but there were sufficient points of convergence so that we could say that a deal was possible and I stick to that analysis," Van Rompuy said.

He added: "We are working very hard to get an agreement. We said in November, (we would reach a deal) in the course of next spring but preferably in February. "We are working very hard to get that deal based on the proposals I made at the end of the meeting in November."

"Of course we will fine-tune them; we will improve them so that all of the elements are on the table. I am still optimistic to get an agreement, and as I said, preferably in February."