Brian Lenihan Jnr (Dublin West, Fianna Fail)

I thank Deputies for their contributions on the Government's recapitalisation plans for Allied Irish Banks and Bank of Ireland. I re-iterate the sentiment of my earlier remarks when I stressed that underpinning the stability of the financial system of the State, given its importance to the economy, is vital. The measures announced yesterday are intended to secure the stability of our financial system, increase confidence in the banking system and, above all, facilitate the banks involved in lending to the economy.

I will first address comments made by some Deputies regarding the sufficiency of the Government's investment given Bank of Ireland's recent announcement on impairments and statements made by certain commentators. The State's investment will significantly strengthen the core tier one capital of these banks, bringing it well up in excess of regulatory limits. It is intended to bring their core capital to €12 billion for Allied Irish Banks and to almost €11 billion for Bank of Ireland. In addition, observers should be aware that the existing reserves will be supplemented by ongoing profits and, therefore, the banks are more than adequately equipped to deal with expected losses. It is not correct to suggest, as I fear Deputy Burton did, that the sums invested by the State will be eaten up entirely by losses.

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