Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I thank Senator Barrett for the effort he has clearly put into his consideration of the Bill. It seems our general intentions in this area are well aligned. However, on this particular point of detail, I cannot change the text of the Bill as it is.

The particular subsection deals with the potential payment of callable capital if required. It is desirable to use callable capital as it facilitates the provision of funding by the SBCI to external funders without the need to guarantee that funding. This is the method by which EIB gives comfort to its lenders that their funding is secure. The use of such callable capital by the SBCI may be possible in future but will not be possible at the start.

Callable capital operates on the basis that the borrower sets its level of capital at a level high enough for its lender to be comforted by the fact that the borrower has sufficient loss-absorbing capacity. This capital does not need to be paid to that level from day one but rather simply enabled to be paid at that level. Crucially, the borrower must not be restricted from paying in capital to agreed levels if the pre-agreed circumstances arise. The borrower must respond within a contractually agreed timeframe by injecting the callable capital into the company, and section 11(6) enables such an injection. Given the importance of the subsection for giving effect to the time-limited action, it would not be helpful to require the Minister to seek other sources of funding at the time when she or he needs to act without delay. Furthermore, the Minister may be in a less than desirable position in terms of being able to negotiate a price at the point where the capital has been called.

I have already outlined why, in general, it is important that the SBCI be established with the Minister as the sole shareholder. In short, it is important for public financial institutions such as the SBCI to be bolstered by public ownership so that they can be kept in place to meet the needs of the State and the economy and not disposed of when a private shareholder no longer sees a value in the institution as a profit centre.

Let me reiterate that it is not anticipated that the Minister's shareholding in the SBCI will be sold or otherwise disposed of at any time.