Eamon Gilmore (Dún Laoghaire, Labour)

First, the Chancellor of the Exchequer in the United Kingdom announced conditions attaching to the British package that have not been attached to the Irish package. I note the British proposals include conditions relating to taking an equity share in banks, to restricting payment of dividends and putting restrictions on the reward and remuneration packages of top executives of banks, all of which remain open-ended in Ireland. This is not helpful and I am becoming concerned by the delay in bringing forward the scheme because this delay is creating a degree of uncertainty again about what is happening in the banking world. In the meantime, we appear to have some kind of open-ended unqualified guarantee for the banks.

I wish to revert to the specific question I asked about dated subordinated debt. No other scheme to provide a rescue or support package for the banks in any other country has included this form of debt. This is the form of debt that comes next after equity if something goes wrong. Interest is earned on such instruments at a far higher rate than is earned on a normal deposit. The reason for this is the understanding that such money is at risk if something goes wrong. The scheme the Government announced last week, for a reason I cannot understand, has included this form of debt and has provided a guarantee for it. I have been informed that in the couple of weeks preceding the Government's announcement last week, a great deal of trading took place in this stuff. People were trying to off-load some subordinated debt at a discounted rate and one could purchase some of it for approximately 80% of what it originally was worth. Suddenly, an Irish guarantee scheme guaranteed it to the value of 100%. I am told, for example, that one of the six banking institutions listed in the Government's statement has something like €2 billion of subordinated debt. Why was it included in the Irish scheme? Who decided or recommended that it should be included in the Irish scheme?

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