Eamon Gilmore (Dún Laoghaire, Labour)

It is a week since emergency legislation was introduced to provide a State guarantee for the banks. Last week, we were told the Government would introduce a scheme this week to set down the conditions under which the guarantee was being provided. Yesterday, the Taoiseach told us the scheme is not yet finalised. From what we hear, it may be next week before we see the terms of the scheme. I understand the Minister for the Environment, Heritage and Local Government, Deputy Gormley, stated in an interview this morning that it has been delayed because of the scheme announced in the United Kingdom.

A week after the legislation was introduced, we are still unsure what exactly we have guaranteed. We do not know the terms or conditions of the guarantee provided and we do not know what will come back to the taxpayer in return for the guarantee provided. In the absence of the scheme we were promised what guarantee is now in place? Do I understand correctly that in the absence of a scheme, the guarantee is, in effect, the statement the Government issued on 30 September? If so, as of now does the guarantee only extend to the six banks named in the statement? How is the guarantee extended to the other financial institutions which I understood were to apply on the basis of the scheme? What exactly is the nature of the guarantee and what is its status as of now?

Will the Taoiseach clarify an aspect of the Government statement of 30 September? Reference was made to dated subordinated debt — lower tier two — being subject to the State guarantee. As I understand it, this debt is the arrangement whereby very wealthy people make money available to the banks, effectively as a loan, and receive far higher interest than a normal depositor because the understanding is that if anything goes wrong with the banks the money is gone.

The guarantee scheme announced by the Government last week provides a State guarantee for this form of debt. We have seen a number of schemes introduced by other states such as Germany, Denmark and the United Kingdom. None of these arrangements provides a guarantee or cover for dated subordinated debt.

Why was this form of debt included in the Irish scheme? Approximately how much of this debt exists? I am advised it could be in the order of €10 billion. It is high-risk money provided by high net worth people to the banks on very high interest rates. According to this scheme we have provided a taxpayers' guarantee for it.

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