Michael Noonan

Michael Noonan

Finance minister Michael Noonan said today that the government has succeeded in restoring confidence to Ireland’s banking system.

He noted that Bank of Ireland shares had advanced for three days in-a-row and are currently up about 45pc on last week’s trading price.

AIB has seen significant increases in its shares, as well, said Noonan.

The minister of finance also said that the amount of deposits being withdrawn from the two “pillar banks” has been reduced substantially since Thursday’s announcements.

Noonan told the Dáil that Irish 10-year-bond rates peaked to 10.32pc on March 31 but have since fallen back to below 10pc.

He noted the positive response from various credit rating agencies and banks but warned that “confidence is a fragile flower that can fade under the stress of international events.”

Noonan confirmed the government had the backing of the ECB, which said that in light of the recapitalization of the banks, it would continue to provide liquidity to banks in Ireland and support their plans to deleverage and downsize their balance sheets.

The minister said this support and liquidity would allow the banks to avoid fire sales of assets.

However, the government has identified extra assets that could be sold off by the banks. This would free up money to ensure banks would lend €30bn into the economy over the next three years.

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