Brian Cowen (Laois-Offaly, Fianna Fail)

I will arrange for the scheme to be circulated to the spokespersons tomorrow so they will have plenty of detail before Friday. As the Deputy will understand, the Department of Finance will be busy today with the budget, but we will arrange for it to be forwarded tomorrow.

With regard to Deputy Gilmore's question on the parameters of the scheme, the basic scheme has not changed in any significant way from that which was forwarded to the European Union. Obviously, on the question of the inclusion of other non-domiciled subsidiaries, the extra category has been included to satisfy requirements. It was under consideration, as the Deputy knows, before we forwarded the draft scheme to Europe and, in any event, it would obviously be included there. The scheme was worked through and a very constructive dialogue took place. The basic parameters of the scheme are not different from what was indicated by the Minister for Finance during the passage of the legislation through the House with regard to its conditionality or scope.

The scheme has got clearance from the Directorate General for Competition of the European Union under Commissioner Kroes. I take this opportunity to thank her and her staff, as well as our own officials, the Attorney General and others who worked very hard in what is a complex area to have this scheme available to us absolutely as quickly as possible and in a way that meets European Union requirements. On that basis, this is the scheme that has passed muster with the European Union in terms of meeting those requirements and, therefore, I could not envisage a situation where we would take amendments to the scheme and put at risk the compliance we have achieved as a result of the detailed technical and other discussions that took place. We will put this by way of positive motion and I understand the Minister for Finance will be available in a question and answer session to clarify any aspect beyond the debate itself that Deputies would have in regard to the scheme.

Deputy Kenny raised an important point, on which I wish to comment. We took action a couple of weeks ago to give a full guarantee in respect of all deposits and liabilities in the banks. We took a system-wide approach, which has been taken up by others since then. What is under discussion in terms of the tool kit, in other words the range of options available, as decided at the eurozone meeting on Sunday, relates to a partial guarantee of debt, not a full guarantee. It is not on all fours in that respect with what we did. Recapitalisation is an option for those who want to take action in the future also. I am pleased there is acceptance within the European Union of the action we took and the scheme now being passed by the European Union. There is acceptance that the specific action we took was necessary in the circumstances we faced at the time. We did what we believed was in the national interest to maintain the financial stability of the institutions in the State.

It is important to point out that there are two ways of providing liquidity. The problem as we know has been the question of wholesale inter-bank rates and the fact that money was not available in the system in the normal way in which business is conducted within the banking system. Liquidity can be provided in several ways. One way to provide it, which has succeeded in our case in the present situation — we cannot predict how all of this will evolve, as we still have not seen turbulence in the financial markets recede to normalcy yet — is to provide a full system-wide guarantee. If other states want to provide liquidity in their circumstances by providing a partial guarantee together with a recapitalisation option, it is a matter for them. It is totally within their remit and I respect what they see as the right thing to do in their circumstances.

It is important to point out that although the Irish banking system has problems it is not susceptible to sub-prime debt, which was syndicated into other banking systems, including banks in other countries. Those debts are coming to maturity now and as they do not have a value, they have to be marked down immediately, which perhaps brought about the requirement for immediate recapitalisation in those situations. Irish banks are not in that situation. The capital adequacy ratio of Irish banks is good and is well beyond the European Union requirement of 8%. I understand it is in the region of 11%. The capital base in Irish banks could be anything up to €242 billion.

It is important that we make those points. Every country has its own set of circumstances with which to deal. The tool kit arrangement in respect of the European Union-wide scheme that has been agreed is not mandatory, time limited or time required for countries. While the recapitalisation option can be valid in any country in certain circumstances, it increases the exposure of taxpayers in a way that the guarantee scheme does not, given that one does not have to put money up front or provide equity capital for the institutions. Through the regulatory system that we are now devising for the guarantee scheme, there are many ways we can provide means by which we can assist capital being made available to the institutions from private sources, which the European Union scheme states is the preference in any event.

While I have not ruled anything in or out — it is not good to speculate in these matters — I make the point that there are differentiations in terms of the Irish system. As Deputy Kenny suggested, there has been some contention in the Irish discussion of the issue, that there is an immediate requirement for the Government to do something in respect of recapitalisation. That is not the point since we have given a system-wide guarantee that has provided the necessary liquidity, and the time and space to see what way we envisage the Irish banking system develop from here.

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