BRUSSELS (MNI) – European finance ministers have finalized the
details of the permanent bailout fund ESM, which is to have a capital
base of E700 billion, Eurogroup head Jean-Claude Juncker said Monday.
The plan will ensure that the new fund will have a total lending
capacity of E500 billion, while maintaining a triple-A rating, Juncker
and EU Economic and Monetary Affairs Commissioner Olli Rehn said in a
joint press conference.
The fund, to be operational from mid-2013, will have E80 billion in
paid-in capital and E620 billion in callable capital “in order to ensure
effective lending capacity E500 billion,” Rehn told reporters.
Rehn said that authorities, in particular EFSF head Klaus
Regling, have been in touch with rating agencies and that
he “trusts” this will ensure an AAA rating for the ESM.
Member states plan to present the proposal to their national
parliaments for approval by June.
Asked to comment on European Central Bank President Jean-Claude
Trichet’s persistent criticism that the new ESM is not flexible enough
in its tools, Juncker said that “Trichet is repeating himself.” While he
had in part shared Trichet’s position, Juncker said that the decisions
taken “will be considered as being sufficient.”
The finance ministers also decided that the ESM, to be established
in the form of a treaty among Eurozone member states, will charge a 200
bps mark-up for loans up to three years and 100 bps on top of that for
longer loans, the press conference revealed.
The rates charged by the EFSF on Irish loans, on the other hand,
were not discussed today nor whether Portugal may have to tap the fund,
Juncker said: “We did not talk about Portugal today and we did not talk
about Ireland either.”
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–Frankfurt bureau tel.: +49-69-720142. Email: frankfurt@marketnews.com
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