FRANKFURT (MNI) – The stress tests of Ireland’s banks are likely to
reveal the need for additional capital, Economics Minister Richard
Bruton confirmed in an interview published Wednesday, adding that the
government is looking for an international buyer for Allied Irish Bank.

“Past months have shown that further liquidity is needed and that
the banks’ dependence on the ECB and other cebtral banks has increased,”
Bruton told the German business daily Handelsblatt.

“We can thus expect the stress tests to show the need for fresh
capital,” he said. It’s very difficult for banks to satisfy their
liquidity needs “when there is an impression that they lack sufficient
core capital,” he added. “The two are linked.”

“After the stress tests, we will have a clear picture,” Bruton
continued, calling for a strict application of the best international
standards. “Up till now, each time we thought we had got to the bottom
of things, there was more bad news from the banks and people got
discouraged. We must and will wipe the slate clean.”

Bruton would not be drawn on the likely size of a new support
package. “We need smaller banks that could easily be oriented more
towards public sector firms and less on high-flying institutions that
speculate with complex financial instruments. We need to return to a
simpler banking system for our country.”

“I think it would be a good idea to sell at least one of the large
banks to international investors,” he said. “That would bring both
stability to the financial sector and help restore confidence. That is
why we intend to sell Allied Irish Bank.”

Bruton stressed that the new Irish government is determined to
fulfill all of Ireland’s commitments for fiscal consolidation and repay
all loans in full. But he also called for a sustainable aid structure to
assure a lasting and credible restructuring of banks.

Asked about Dublin’s rejection of EU governments’ demand for a hike
in its 12.5% corporate tax rate, the minister explained that the economy
would have to rely on export growth to overcome the crisis.

“Therefore it is absolutely necessary to protect Ireland’s
competitiveness with great zeal,” he said. “In a crisis one must not
raise taxes and undermine the country’s attractiveness to investors.”

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