Reuters International

Irish Prime Minister Enda Kenny speaks to the media at the general election count centre in Castlebar, Ireland February 27, 2016. REUTERS/Clodagh Kilcoyne

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By Padraic Halpin

DUBLIN (Reuters) - Acting Irish Prime Minister Enda Kenny is to seek re-election in parliament on Friday in a vote his party hopes will bring an end to 10 weeks of political deadlock.

It is the fourth vote, but the first with a realistic chance of success after he secured the agreement last week of Ireland's second-largest party, Fianna Fail, to abstain in key votes to let a minority government run until 2018.

Fine Gael still needs the support of six more independent members of parliament for Kenny's re-election and were in talks to secure the votes. One independent deputy, John Halligan, told journalists he hoped a deal would be reached later on Thursday.

The draft programme for government under negotiation, a copy of which was published on the Irish Times newspaper's website, stipulated that the state would not sell more than 25 percent of its holdings in any Irish bank before the end of 2018.

The move would not affect the potential sale of a 25 percent stake in Allied Irish Banks <ALBK.I> this year but represents a shift from February when Finance Minister Michael Noonan said he hoped to sell a second 25 percent stake in the lender, which is 99 percent owned by the state, between the end of 2016 and 2020.

It would halt until 2019 any further private investment in the smaller mortgage lender, permanent tsb <IL0A.I>, after the government sold a quarter of the bank last year. The state retains a 14 percent stake in Bank of Ireland <BKIR.I>.

Ireland's Central Bank will also be asked to procure an independent assessment of lenders' arrears and negative equity loan books.

While the proposed new government stopped short of bowing to pressure to ask the central bank to intervene in the mortgage market, it will further pressurise banks to cut rates.

"It is not ethically acceptable for Irish banks to charge excessive rates on standard variable rate customers," the document states. "We will take all necessary action to tackle high variable interest rates."

The programme also commits to a new tax on sugar-sweetened drinks and to invest the projected 2 billion-euro profit from the state-owned "bad bank" selling off lenders' soured loans into infrastructure projects.

Kenny will name the country's new Cabinet on Friday if he is re-elected, a government source said. A separate, senior government source said on Sunday that Noonan was likely to be reappointed to his position.

(Additional reporting by Conor Humphries; Editing by Louise Ireland and Matthew Lewis)

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