Simon Harris (Wicklow, Fine Gael) | Oireachtas source

The National Pensions Reserve Fund Act 2000, which set up the NPRF to pre-fund the burden of pensions on the Exchequer from 2025, was amended in 2009 to allow the Minister for Finance in certain circumstances to direct the NPRF commission to invest in financial institutions. This was the mechanism used to recapitalise the banks following the financial crisis. I acknowledge why the Senator proposes the deletion of this provision but I do not propose to accept that. We are carrying over an existing provision into this legislation with the difference being that the Minister would give direction to the agency rather than the commission. We do not foresee ever having to use the provision again but we have retained it in statute as a precautionary measure. A large amount of new capital has gone into domestic banks in recent years and significant work has been done by the Central Bank, including the balance sheet assessment in the fourth quarter of 2013, which assessment confirmed that, having recognised additional provisions, each of the bank's capital ratios was above the minimum regulatory requirement.

This provision cannot be used lightly. The Minister for Finance must first consult the Central Bank and decide if it is in the public interest to invest in financial institutions to remedy a serious disturbance and prevent potential serious damage to the financial system and to ensure the continued stability of the financial system.