Brian Lenihan Jnr (Dublin West, Fianna Fail)

——should at his request provide for him any information that may be required. It is essential that these matters are investigated and dealt with and that those responsible are brought to account.

With regard to the investigations taking place, in the case of this particular institution the decision of this House to take the bank into State ownership means that a clear blue line can be drawn between the future of this institution and what went on in the past. This affords us the valuable opportunity of dealing in an open way with everything that has passed.

I want to touch on another matter raised in a number of contributions, which is the question of what the taxpayer is obtaining. As I indicated earlier, following the guarantee a firm of accountants conducted a detailed analysis of the loan books of all of the institutions and, in particular, the loan book of Anglo Irish Bank in estimating the future losses of a bank. As I pointed out several times in recent days, the position is that the current loan book of Anglo Irish Bank remunerates the deposits. In other words, there is sufficient income derived from the loan book to pay for the operation of the bank and to pay for the deposits at the bank. This is a fundamental and important point. Much of the public debate has suggested that the bank is not in a solvent position. The bank is solvent and it is now coming into State ownership.

I was advised by the Governor of the Central Bank, other financial authorities and my officials. The Government weighed up the arguments at official level with me in conference and subsequently I advised the circumstances to my colleagues that the balance of the argument favoured nationalising this institution. The situation could potentially be a systemic risk to the Irish banking sector and the economy. This potential has not yet materialised and this is an important point.

With regard to the examination conducted by PricewaterhouseCoopers, having examined the loan book, the bad debts and the future potential profits that could be taken by this institution from the performing loans it had, it estimated that as a private concern to put the markets beyond doubt about its future viability required a €4 billion recapitalisation. We do not have to do this recapitalisation. As a result of the doubts expressed by Members of this House today and which I also entertained in early December, I was not prepared to go beyond €1.5 billion to give immediate confidence to the institution in the context of considerable market scepticism following the revelations about the chairman.

The position now with regard to public ownership is that while there is exposure, and I have been asked frequently about this in recent days, the exposure is not to any immediate commitment to funding for the bank. Were there difficulties, the State would have to provide working capital and were it provided the State would be entitled to extract it from any profit the bank might accrue. This is the position with regard to the exposure of the taxpayer.

I appreciate the point made by Deputies on the question of the systemic character of this bank and this raises two fundamental issues. One is the number of depositors, which I outlined to the House earlier. There are 300,000 retail depositors, 72,000 of whom are in the country, and 12,000 corporate depositors, 3,500 of whom are in the country. That is a fundamental question of systemic importance in the economy and a balance sheet of such size. There is, however, a wider issue up to which we will have to face and in regard to which the Government will perform its responsibilities in the coming days, that is, the whole question of how, to the outside world, we manage our finances. To the outside world, Ireland must be seen as a country which honours its debts and obligations. As a country, we cannot afford to have the message going out that we will let a bank fail and, consequently, dishonour the depositors who have invested their money in it. We constantly point out how exposed we are to global trends. We are equally dependent on international goodwill. Whether in regard to the Lisbon treaty or this particular matter, we cannot afford to impair our credit in the outside world.

That is a fundamental reason I proposed to my colleagues in Government, who agreed, that we had no option but to put the seal of full State ownership around this bank to ensure that the taxpayer was fully and comprehensively protected in regard to the management of this bank and in respect of the guarantee the State gave to it.

I refer to the guarantee because the point was raised by Deputy Rabbitte earlier. Irrespective of whether we had given a guarantee, we would be obliged to nationalise this institution. Indeed, the nationalisation of this institution was a matter to which we gave some attention in September but for the reasons I outlined earlier in the debate, we decided, on the balance of arguments, against it at that stage.

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