Michael Noonan (Limerick City, Fine Gael)

The issuance window under the eligible liabilities guarantee or ELG scheme runs in national law until 31 December 2011. This is subject to a renewal of the current European Union state aid approval for the continuance of the so-called issuance window for the scheme beyond 30 June to 31 December 2011. The issuance window is the period during which a guarantee can be applied to a new bank liability. The guarantee is then in place for the duration of the term of the liability.

The State authorities, in particular the Central Bank, monitor funding conditions for the guaranteed credit institutions on an ongoing basis. A formal assessment will be undertaken by my Department shortly which will be communicated to the European Commission for the continuation of state aid approval to the end of this year. In this regard, the views of the Governor of the Central Bank on how best to continue to maintain confidence in Irish banks, in particular that of depositors, will be a key part of this assessment.

It is also important to ensure there is no uncertainty regarding guarantee arrangements. In that context, I confirm that debt and term deposits issued during the relevant issuance windows continue to be guaranteed for the duration of the term of the debt or deposits regardless of what happens to the ELG issuance window in future.

The capital and liquidity assessments being carried out by the Central Bank together with the deleverage plans being developed by the banks are critical steps in restoring market confidence in the Irish banking sector. This is expected in due course to facilitate the return of the banks to broad based market funding. The necessity for State guarantees of bank liabilities will be reviewed by the authorities in light of the progress achieved in restoring the banks to conventional funding mechanisms. This is a key medium term objective for the Government - one that is fully in line with the programme agreement with the EU and IMF – to differentiate fully bank debt from that of the sovereign to underpin Ireland's overall fiscal sustainability.

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