Brian Lenihan Jnr (Dublin West, Fianna Fail)

I move: "That the Bill be now read a Second Time."

I thank Deputies for their time, given the short notice available, but clearly this is an issue of serious national importance requiring swift action by the Government. I bring this Bill to the House today with a view to securing the financial position of Anglo Irish Bank and by extension the stability of the Irish financial system. The Government took the decision to bring Anglo Irish Bank into public ownership following consultations with the Central Bank, the National Treasury Management Agency, the Financial Regulator and our legal and financial advisers. I have also consulted with the board of Anglo Irish Bank subsequent to the decision of the Government.

I want to assure the House that the Government's move to nationalise Anglo Irish Bank is in the national interest and has been taken to safeguard the economic future of the country and the continued viability of our financial institutions. The Government is determined to protect the taxpayers' interests by putting clear blue water between the new Anglo Irish Bank and the unacceptable behaviour that has gone before.

It has been said so often outside this House that perhaps this bank is not of systemic importance to the Irish economy but I would like to outline on the record of the House certain fundamental facts about this institution.

The total number of customers with loans in this institution is approximately 7,000, of whom the Irish customers who owe money to the bank are approximately 5,000. The total number of retail depositors in this institution is approximately 300,000, of whom 72,000 are Irish customers. The total number of corporate deposits held in this institution is approximately 12,000, of whom approximately 3,500 are Irish customers. It is important the House understands that this bank is of systemic importance to Ireland and our reputation throughout the world. This was not an optional decision for the Government; it was a carefully considered decision, arrived at by the Government after consideration of all the factors at a full meeting of the Cabinet. When the House endorsed the decision of the Government on 29 September 2008 to guarantee the six Irish financial institutions, it was clear the Government took that decision to prevent a failure or collapse on the part of any of these institutions.

The next step taken by the Government, as part of a consistent and coherent banking policy, was to analyse the loan books of all the financial institutions. We are fortunate that ours is one of the few states that have had an opportunity to take such action. Deputy Kenny requested that the details of the PricewaterhouseCoopers report be made public. The difficulty I have is, of course, that the report contains the details of customers and customer information in several Irish financial institutions. That cannot be disclosed in this House or in the public domain, given the fundamentally confidential character of the relationship that always exists between a bank and its customer. However, the State did have the benefit of a very detailed analysis of the loan books of the Irish banks before any decisions were made about recapitalisation of these institutions. When recapitalisation decisions were made, it was in the context of a carefully researched information document being available to the Government and its advisers.

Particular decisions were made about the three largest institutions, the Bank of Ireland, Allied Irish Banks and Anglo Irish Bank. Those decisions were announced before Christmas. A particular arrangement was made with regard to Anglo Irish Bank, to which I will refer later. At the expiration of the period envisaged in that arrangement, the Government reviewed the position of Anglo Irish Bank and came to the conclusion that the final option of nationalisation was the only one available to secure the position of the bank and the wider financial system in Ireland.

The Government's approach, therefore, has been a considered response to the financial crisis, which has resulted in state interventions across Europe and the world. Through the bank guarantee scheme we have created a space to assess the further measures needed to best protect our financial system in a strategic manner. We have always sought to minimise the risk to the taxpayer. The bank guarantee scheme has succeeded in securing the funding position of the Irish financial system as a whole. Our recapitalisation proposal will strengthen Allied Irish Banks and Bank of Ireland as financial institutions central to the economic future of the country. Discussions are continuing about the capital requirements of other financial institutions.

While recapitalisation is the appropriate solution for AIB and Bank of Ireland, we have concluded that a different response is required for Anglo Irish Bank. Intensified oversight of this bank in recent months has brought to light unacceptable practices by the former chairman and some of his former staff. The concealment of loans to directors and the scale of those loans have done serious damage to the reputation of Anglo Irish Bank and to Irish banking at a difficult time in the markets. These matters are now the subject of a number of investigations being undertaken by the Financial Regulator and the Director of Corporate Enforcement. These investigations must be followed up both by the regulatory authorities, which have extensive powers, and by the bank itself. I will insist on this as shareholder and as the responsible Minister.

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