Brian Lenihan Jnr (Dublin West, Fianna Fail)

No, but I refer to the actual payment of the interest not just the capital; the interest also is postponed in cash terms to the end of the repayment term. However, in accountancy terms, the obligation to pay the interest is treated to have arisen when the obligation accrues. The repayments of the note will be made on an annual basis until the final principal value of the promissory note, together with the appropriate interest rate on the note, has been covered.

Take the current €18.88 billion for present purposes, it is expected that note will be paid off over ten to 15 years depending on whether the interest is paid annually or added to the principal. Under the terms of the promissory note, the note will be paid in full at the time of any winding up of the institution. This condition is in line with the required process for the winding up of any business.

An interest rate is included in the terms of the note to enable the bank to value the note at par on its books and therefore achieve the capital benefit the bank requires to meet its regulatory capital requirements. The principal value of the note, together with the appropriate interest rate, will be paid in instalments over ten to 15 years depending on whether the interest rate is paid annually or added to the principal.

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