Almunia stressed that the total amount Ireland spent to recapitalise its banks over the course of the crisis is equivalent to about one third of its GDP in 2010. No other EU country comes even close to this proportion. The next in line is the Netherlands with 6.3 per cent.
On Ireland he also presented the following key points:
• The global crisis was the trigger but not the main cause of Ireland’s financial woes, originated in excessive and careless lending by the Irish banks to the commercial real estate sector.
• To make matters worse, these loans were primarily funded by short-term wholesale funding.
• Other factors that contributed to the crisis include a regulatory failure to assess risk in traditional lending.
• The crisis threatened the stability of all domestic banks and significantly altered the competitive landscape in Ireland’s banking market.
• Irish banks have received significant State recapitalisations – €46.3 billion have been granted so far – and will transfer around €75 billion of commercial land and development loans to the National Asset Management Agency.
• As to foreign banks, four of the five institutions with the biggest operations in Ireland have also received government support. After the crisis, KBC and Rabobank have reduced their activities and Lloyds has left the Irish market altogether.
• The implications of the rescue for the public coffers is huge.
• The total amount Ireland spent to recapitalise its banks over the course of the crisis is equivalent to about one third of its
GDP in 2010.
Full speech
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