Brian Lenihan Jnr (Dublin West, Fianna Fail)

As the Deputy will be aware, the Credit Institutions (Financial Support) Scheme 2008 will expire on 29 September 2010. This scheme was introduced following the collapse of Lehmann Brothers and the following liquidity crisis of September 2008. However, the funding of Irish banks has improved dramatically in the intervening period and the blanket guarantee will no longer be necessary into the future. A key feature of the new scheme introduced in December 2009 is access to longer-term funding, which is in line with the mainstream approach in the EU and is expected to contribute significantly to supporting the sustainable funding needs of the banks and to securing their continued stability. The structure of the scheme allows participating institutions to issue guaranteed and unguaranteed liabilities, which will help reduce their reliance on State guarantee support over time as financial market conditions continue to improve.

AIB, Anglo Irish Bank, Bank of Ireland, EBS, Irish Life & Permanent and the Irish Nationwide Building Society and named subsidiaries, are the participating institutions in the ELG scheme. Deposits covered by the ELG scheme at the end of February stood at €108 billion, while debt covered by ELG was €37 billion. The NTMA provides a comprehensive list on its website of securities which are guaranteed under ELG.

With regard to dated subordinated debt, this is not a covered liability under the ELG scheme. The EU Commission's banking communication of 13 October 2008, states that guarantees should not include subordinated debt. The new scheme reflects that policy under EU State-aid rules. In addition the funding positions of the covered institutions have improved significantly since the original guarantee and there is no need to have these liabilities covered. It must be stressed, however, that these dated liabilities will remain covered under the CIFS scheme until the expiry of that scheme.

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