Irish banks resilient, says Donohoe as he defends slow restart

Government stands ready to fire up its efforts to revive growth, Finance Minister Paschal Donohoe reassured investors, as he defended the relatively slow pace of economic reopening after the coronavirus outbreak.

Leo Varadkar’s government is taking a more cautious approach to reopening the economy than nations such as Germany and France, with a full return to normality not due until the middle of August.

Where other nations have moved quicker, consumers have been wary of taking to cafés and stores as concerns around the virus linger, Mr Donohoe told investors in a call yesterday.

“We’re going to be approaching that economic reopening off a high phase of confidence about our public health,” he said, adding that would be a “prize” worth aiming for. “As we move through 2020, if there are more things that we need to do to support the Irish domestic economy – and I believe that it’s likely that there will be – this government and the next government will do that,” he said. Mr Donohoe said he still expects “a gradual, but clear recovery” in the second half of the year, laying the foundation for a “strong” year in 2021, assuming Brexit doesn’t throw up more surprises. Earlier this month, the Government sketched out a plan to guarantee €2bn of loans for small and medium-sized companies, one of a raft of measures designed to underpin the economy since the crisis erupted. In addition, the State is preparing to provide €2bn worth of capital to larger companies.

Additional resources will be found if needed, Mr Donohoe promised.

“I just want to ensure that if we do it, it’s targeted, it’s effective,” he said.

On the call, Mr Donohoe also sought to reassure investors of the strength and independence of Irish banks, after their shares plunged in the wake of the virus outbreak.

“The agenda that I know has caused concerns for shareholders or potential shareholders in the Irish banking sector – in relation to regulatory agenda, policy agenda, the conservatism in relation to capital – they may well be the very factors that matter more than ever to the long-term growth of the banking sector in different European national economies,” he said.

“We’re on the right side of those issues here in Ireland.”

Minister Donohoe expects a ‘gradual but clear’ recovery in second half of the year