MINISTER FOR Finance Michael Noonan has said the wave of volatility in financial markets made it apparent that some European banks will have to be recapitalised.

European governments have been resisting pressure from the IMF for a big recapitalisation of their banks. But amid continuing uncertainty about the fate of Greece, the collapse of shares in Franco-Belgian lender Dexia adds to pressure on Europe’s weakest banks.

“We have done our recapitalisation and we have done it very thoroughly and to very strong stress testing,” Mr Noonan said as he left a two-day meeting of EU finance ministers in Luxembourg.

Support for Ireland’s banks came at a “fairly high” cost, he said. “My private opinion is that we probably had to capitalise in excess of what was absolutely necessary to ensure that we restored confidence in the Irish banking system.”

Asked about criticism of EU governments – that they were making matters worse by not recapitalising banks sooner – the Minister said timing was a matter of judgment.

“I think it’s apparent that some European banks will have to be recapitalised but the initiative has to come from their own governments and their own finance ministers,” he said.

Mr Noonan said he did not raise the possibility of deploying new powers in the European Financial Stability Facility bailout fund to recapitalise Anglo Irish Bank in the Luxembourg talks. “It’s a matter that I’d been raising in bilateral meetings,” he said.