Brian Lenihan Jnr (Dublin West, Fianna Fail)

The guarantees is for certain derivatives, repo and clearing-type counterparties. As noted previously, the bank is committed to entering only into arrangements which are to manage balance sheet risks and the bank has confirmed that it does not take positions outside the limits approved by the board of directors, and the bank keeps the NTMA informed. The vast majority of the derivatives are covered by collateral support agreements, which require the posting of collateral in the event that the derivative is out of money - in other words, if it becomes a liability. The collateral is netted against the State's exposure in the event that the guarantee is called. The guarantee has not been called. The Deputy asked me to give the House an estimation of what it would cost and I said it was not possible to give such an estimation. The Deputy sought a market value cost of the guarantee which I could not give him. In terms of the maximum net exposure were all the derivatives to arise as a liability, assuming the guarantee was called, it would be less than €10 million.

The other exposures relate to collateral valuation movements for repos, intraday balances on clearing accounts - these accounts are cleared to nil each day - and a backstop facility for the bank's commercial to paper programme. To take an exemplary week, the total maximum net exposure to these transactions during the week ended on 31 March 2010 was €600 million. That would have been the total exposure were there a call on any of those that week. Those are the figures I can give the Deputy. However, I cannot give a market price for the guarantee, which he asked me originally, although I outlined the reasons it was difficult to do so. We could attempt the exercise and provide him with the information if he wishes.

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