Martin Mansergh (Tipperary South, Fianna Fail)

Deputy Burton asked why we are extending the CIFS for five years. It is not correct to say that we are extending it for years. This is a new scheme with an issuance period which ends on 29 September 2010, which is also the end date of the CIFS scheme. After 29 September 2010, no further guaranteed debt can be issued and no more guaranteed deposits can be taken. However, during the issuance period participating institutions can take term deposits or issue debt with a term of up to five years. The objective is to facilitate the banks in putting in place medium-term funding to enhance their ability to discharge their central role in facilitating economic activity in the State. An important element of the new scheme is the facility to allow participating institutions to issue unguaranteed debt, which is key to restoring market confidence in the institutions.

Deputy O'Donnell asked why it is only now that we are introducing the scheme. The European Commission gave the necessary state aid approval on Friday, 20 November for the scheme, which was published thereafter. The longer-term guarantee has been signalled since April and its outline was published on 16 September.

Why is it proposed that dated subordinated debt would not be covered under any schemes that we might make? The dated subordinated debt currently in issue will continue to be covered under the CIFS scheme. However, the Commission's banking communication of 13 October 2008 states that guarantees should not include subordinated debt.

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