Brian Lenihan Jnr (Dublin West, Fianna Fail)

The provision of the guarantee in the first instance and the access to liquidity that it has provided for our banks and building societies is an important benefit in ensuring that finance is available and affordable in the economy.

As Minister for Finance, I will be entitled under the scheme to recoup such amounts from the covered institution and may direct the covered institution concerning its business and corporate structure. The covered institution must, in such an event, draw up a restructuring plan within six months of such a payment being made.

In addressing issues or questions that have been raised in respect of the scheme since it was published, current estimates indicate that approximately €1 billion will be yielded from the charge to banks for the guarantee over the two-year period.

As I emphasised, while we must cover the taxpayer costs, we do not wish to impose a charge at a prohibitive level that will undermine the long-term sustainability and commercial viability of our financial institutions. A difficult and delicate balance must be struck in this instance between ensuring that the Exchequer is reimbursed for the cost of the scheme up-front and the financial sector is safeguarded at a time of extraordinary financial upheaval. We must support investor and debtor confidence in the overall Irish banking system.

We have put in place a wide guarantee for the banking system in Ireland. The guarantee has to date been successful in stabilising the position of the banking system in Ireland during an unprecedented period in international financial markets. It also has been approved as being in compliance with the European Commission's requirements on State aid. Other EU member states and other countries around the world have adopted similar guarantees and schemes. Most other countries have incurred far greater expenditure on behalf of the taxpayer in such schemes.

Last Sunday's euro group plan sets out a toolbox of measures of which individual member states may avail, according to their national circumstances, to buttress their financial sectors. This position was endorsed by the European Council, which noted the existence of national measures approved by the Commission.

Ireland already had taken effective and decisive action with the announcement of the guarantee scheme. The Irish legislation and this scheme are aligned firmly with the main themes of the euro group plan.

In return for the guarantee, I expect each covered institution to undertake a fundamental review of its corporate governance and to take appropriate steps to strengthen their boards and management, where necessary. I also expect them to adopt a positive attitude to customer needs and to exercise appropriate restraint with regard to customers, as well as in respect of rates paid on deposits. In addition, I expect them to take all necessary steps to ensure their capital base meets regulatory and Central Bank requirements.

As far as the issue of parliamentary oversight is required, the scheme provides for reporting by the Minister on its operation to the Oireachtas Joint Committee on Finance and the Public Service every six months.

As clearly demonstrated in recent weeks, the pace of these events is rapid and new developments often are almost entirely unexpected or unpredictable. It is important to make clear to this House that the Government will continue to act swiftly and decisively and will take whatever steps it believes on the expert advice of the Governor and Financial Regulator to safeguard the maintenance of financial stability in the wider public interest. The Government believes this scheme can play a central role in the next two years in achieving the demanding objectives that have been set for it and I commend it to the House on that basis.

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