Finance Minister Michael Noonan today questioned whether the ESM is the best entity to run the Irish banks, should it end up taking an equity stake in them.

He told a pre-Ecofin briefing today there remains a question about whether European rescue funds are best placed to run Irish banks.

“There’s a question, ‘do you think a fund in Europe that is designed as a rescue fund are really the best people to run an Irish bank?'” Mr Noonan told the Oireachtas joint committee on finance, public expenditure and reform in Dublin this morning.

“Obviously, they have no experience in running a bank. We need to consider that as well. What kind of arrangements would there be?” Owen Callan, Senior Fixed Income Strategist at Danske Markets said the ccomments signal a change in Government policy

“It seems the Government is starting to step back from its previous policy of trying to persuade Eurozone leaders to directly recapitalise the Irish banking system, and so improve long term Irish debt sustainability,” he said

“In our view, unless the price being offered by the ESM was significantly above current distressed and bottom-of-the-cycle market prices, it would make much more sense for the Government to seek to partner up with a private sector trade buyer, or else simply hold on to the banks until the market has recovered back towards book value.”