Brian Lenihan Jnr (Dublin West, Fianna Fail)

A risk-sharing element has been included.

The amount a borrower owes will not change because of the transfer of a loan to NAMA. The agency will have a statutory duty to maximise the taxpayers' return and will therefore be expected to use all of its means to this end. The Bill provides the agency with a wide range of powers it needs to pursue borrowers and enforce security. In some cases this will mean that borrowers' personal assets will have to be assumed by NAMA.

I am also conscious of the need to avoid a repeat of the current position in the market for development land. A requirement has been included in the Bill obliging NAMA to have regard for the need to avoid undue concentrations or distortions in the market for development land. I intend to issue guidelines governing the agency's interaction with borrowers in the completion of properties acquired by NAMA.

The banking system has let us down. However, it can revive and serve our economy in a proper manner, but the existing structures cannot remain the same. Already a number of banks are developing restructuring plans to tight deadlines to meet EU requirements arising from recapitalisation options. Any institution participating in NAMA will be required to restructure its operations and I will be insisting that this is a real process leading to a reformed and re-invigorated banking system. It is too early to outline a definitive shape for the new system and there must be scope for subsidiaries of external banks to play their full part. This will be the focus of my work in the coming weeks.

I referred earlier to the importance of the bank guarantee scheme in stabilising the banking system following its introduction last year. In June last, I introduced changes to the scheme as part of the Financial Measures (Miscellaneous Provisions) Act 2009 which allowed for the extension to the Government guarantee contained in the Credit Institutions (Financial Support) Act 2008 beyond the current expiry date of 29 September next year. As I announced in the supplementary budget, the guarantee will be amended to facilitate access for Irish financial institutions to longer term debt. I propose to adjust the current guarantee but retain all of the most important features. The details of this will be published on my Department's website this afternoon. The new scheme will be somewhat more targeted. It will allow for greater long-term debt issuance under the guarantee, moving it more towards the European model. The revised guarantee scheme will represent the necessary first step in an exit strategy for the State from the blanket guarantee offered in September 2008. However, it is clear that the stability provided by the guarantee remains important and it will remain extensive and retain the blanket guarantee for deposits.

A key feature of the modified guarantee scheme is that it allows the covered institutions to access un-guaranteed funding. Over the past month certain Irish institutions have started taking the first steps towards issuing un-guaranteed term debt and I very much welcome this positive trend and sign of improved vitality in the banking system. EU State aid approval for the scheme is at an advanced stage. A formal market notice will be issued later this month once Commission approval has been secured and I anticipate that I will bring the necessary statutory instrument to commence the scheme before the House in early October.

The funding advantages provided by NAMA, together with the continuing support of the guarantee scheme, will underpin the stability of funding for the Irish financial system. The House will be aware that market participants pay keen attention to our debates on financial matters. For the avoidance of doubt in the market, all liabilities covered under the existing guarantee on liabilities, known as the CIFS scheme, will remain fully guaranteed until 29 September 2010.

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