Enda Kenny is to hold crisis talks with German chancellor Angela Merkel to sort out confusion over a deal on legacy debt for Irish banks.

Ireland’s Prime Minister will fly to Berlin on Thursday after weeks of confusion over Germany’s stance on debt relief in the EU bail-out programme.

Kenny is due to meet Merkel ahead of Ireland’s presidency of the European Union but will use the talks to find out exactly where the Germans stand on the demands for legacy relief.

An Irish Government source has confirmed to the Irish Examiner newspaper that the leaders will resume discussions on easing the burden of rescuing lenders after a telephone call between the pair.

Kenny confirmed: “I was very grateful to have the opportunity to have a real conversation with the chancellor just this week.

“We have the understanding of the joint communiqué that we issued in regard to Ireland’s position in so far as the decision on June 29 which was taken. We intend to follow that through.”

Merkel and Kenny appeared to clash last week after the Fine Gael boss claimed that European Union leaders had given a clear reaffirmation on a decision to reduce the debt.

Merkel responded by saying there would be no back-dated recapitalisation of eurozone banks and insisted that if recapitalisation were possible, it would only be possible for the future.

The German and Irish leaders then issued a joint communiqué to clarify their positions which reaffirmed the June 29 agreement that the sustainability of the Irish programme would be improved.

Kenny has also dismissed all suggestions that Ireland will need a second bail-out from the European Stability Mechanism to cover its legacy bank debts.

He insisted: “Ireland has already recapitalised its banks to the highest possible level and Germany has already acknowledged Ireland is a special case in this regard.

“This is not a sort of Troika bailout situation that applies now. Ireland’s banks have been recapitalised to the highest level. That’s a matter of historical record.

“That burden has been put on our public and on our taxpayers, and that’s why we are pursuing the decision taken on June 29 to bring that to a reality, which will ease our position somewhat.”

German leader Angela MerkelGoogle Images