Brian Lenihan Jnr (Dublin West, Fianna Fail)

I thank the Deputies for their contributions. I am happy to clarify a number of issues that were raised during the debate.

A number of issues more relevant to the recapitalisation strategy have been raised in the proposed amendment to the motion for a Second Reading. I do not accept the case for the amendment. Indeed, in regard to the Fine Gael Party, I am disappointed it tabled a motion in the House suggesting that the Government recapitalisation strategy for Allied Irish Banks and Bank of Ireland has already been dismissed by the financial markets as lacking in credibility.

These institutions, which are our two largest banks, have substantial numbers of employees throughout Ireland. At all stages in the different debates we have had on banking, it has been made clear that the security and stability of these institutions is something which all sides of the House were anxious to see assured. It is disappointing that the main Opposition party, in tabling an amendment to the Bill, decided it knows what the market knows is something I do not know.

We all need to act in a responsible manner in regard to our banking system. We all need to recognise and we all accept, certainly in this House, that great mistakes were made and that many of those who made mistakes must take responsibility for that. Equally, however, the whole purpose of the recapitalisation strategy was to give confidence to these two institutions through a substantial investment by the State which would assure those investors who look at these institutions throughout the world that the State was prepared to put money on the line to ensure the survival and viability of these institutions. It ill becomes the main Opposition party in the State in regard to these two institutions to table a motion in Dáil Éireann stating that the recapitalisation strategy has been dismissed by financial markets as lacking in credibility.

The reality of course is that we all want to see these institutions flourish. I do not question the goodwill of the Opposition parties in that respect. Indeed, Deputy Burton on behalf of the Labour Party has frequently alluded to the importance of securing these institutions. I am surprised Fine Gael would make its own private assessment of what the markets believe about these institutions.

Their shares are trading at a very low stock but shares of all financial institutions throughout the world are trading at a low stock. The crucial point here is that because the shares are trading at a low stock, the Government believed, and I would have thought all sides of the House would have agreed, it was essential to secure these institutions. I certainly accept there is room for a wide measure of disagreement, debate and argument about how we secure them but on the basic principle of how they are viewed throughout the world, it is not a good idea for the main Opposition party to raise questions about this in a motion in the House.

With regard to the second feature of the Fine Gael amendment, namely, "the Government has refused to provide an assessment of the superior 'Good Bank' recapitalisation model put forward by Fine Gael Finance Spokesman Richard Bruton TD", I am quite happy to give an assessment of the "good bank" recapitalisation model put forward by Deputy Bruton. As canvassed by Deputy Bruton in the House, it involved an actual default on our international obligations on the part of the banking industry. Again, it is unhelpful for the main Opposition party to suggest we should contemplate default in regard to banking obligations.

With regard to the question of the income cap for bank executives, I agree with the spirit of that element of the Fine Gael amendment. We very definitely need an income cap on bank executives; we need to insist it happens and I support it. The report of the Covered Institution Remuneration Oversight Committee, CIROC, has arrived in my Department and while I have yet to study it, I assure Deputies it will be brought before the Government with all due haste.

In the debate in this House on the Government's proposed recapitalisation of Allied Irish Banks and Bank of Ireland, I highlighted the detailed preparatory work undertaken before the Government announcement. The loan book assessment undertaken by PricewaterhouseCoopers was supplemented by an assessment for the Financial Regulator by independent valuers Jones Lang LaSalle of elements of the bank's property-based loan portfolio and the value of collateral underlying it. This allowed PricewaterhouseCoopers to make a complete report on the loan books of these two banks and provided a basis for an assessment by the NTMA, assisted by Merrill Lynch, of the level of capital required.

The total amount to be invested in AIB and Bank of Ireland, €7 billion or €3.5 billion for each bank, was determined following consideration of advice on likely trends in property values and on various stress scenarios for the economy and property values. The State's investment will significantly strengthen the core tier 1 capital of these banks, increasing it well in excess of regulatory limits. The recapitalisation proposals are subject to approval by the banks concerned at EGMs to be held in late March and early April.

I read Deputy Burton's entire contribution on Second Stage because I can understand that she did not appreciate the economics spokesperson of the Government not being present.

See this speech in context