Brian Lenihan Jnr (Dublin West, Fianna Fail)

Really Deputy, I am trying to address the issue raised by Deputy Rabbitte and I am making the point that the Governor is very clear in his advice that those obligations should be met by those banks in due course, first because senior bond holders as a matter of law in Ireland rank equally with depositors and therefore under the relevant EU legislation and under our domestic constitutional arrangements, any haircut to them would have to apply equally to depositors, which I assume nobody in this House wishes to do but perhaps I will hear a different policy from the Labour Party on this next week.

Second, to dishonour or raise any suggestion of a dishonouring of senior debt would be very damaging for our capacity to raise funds and for the capacity of the banks to raise funds. This is my response to what was a considered intervention by Deputy Rabbitte.

I thank the Members of the House for their contributions to this debate. Although Deputy Noonan's proposed amendment was disallowed and he may feel constrained to oppose the motion, I want to thank him for the constructive tenor of what he said on the record this evening and I hope I can be of some assistance to him in this regard.

Three substantive issues were raised by Deputy Noonan, the first related to the question of resolution regimes for distressed credit institutions. Previously, I indicated in the House that I am examining options for the introduction of a legislative regime to deal in a systematic way with distressed financial institutions to ensure the State has in place a range of tools to address problem institutions, effectively in the interests of maintaining financial stability, minimising reliance on public money and ensuring continuity of key banking activities. In view of the central role performed by central banks in resolution frameworks for financial institutions, my Department is consulting with the Central Bank and the regulator to develop the necessary legislative proposals. I would expect that this process would lead to the introduction of an appropriate legislative framework for bank restructuring in line with what Deputy Noonan wishes to see and secure.

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