Irish bankers joke over bailout at EU’s expense

In the sort of scene that must infuriate Chancellor Angela Merkel, Irish bankers were taped laughing about a bank bailout deal and then mocking the European Union’s paymaster by singing the German national anthem.

Recordings of senior executives in Anglo Irish Bank, the lender at the heart of Ireland’s EU-IMF bailout, making light in 2008 of the government’s decision to guarantee their liabilities at the height of the crisis underlined on Tuesday why Germany is so wary of creating a European banking union.

Berlin’s concern that it will end up on the hook for other countries’ debts if such a union is created has held up the project’s progress, particularly ahead of federal elections in September, at which Merkel is seeking a third term in office.

But without a banking union, investors are likely to continue to mistrust banks in highly indebted euro zone countries, keeping them frozen out of the interbank lending market and holding up the bloc’s economic recovery.

The lack of progress vexed bankers and investors gathered in Paris for the spring meeting of the Institute of International Finance (IIF), the industry’s main lobbying group.

“If you want to get the economies growing again - and credit supply is part of that - then it’s important the system is stable. At the moment there are still some fairly fundamental debates still going on,” Douglas Flint, chairman of both HSBC, Europe’s largest bank, and the IIF told Reuters.