Michael Noonan (Limerick City, Fine Gael)

I propose to take Questions Nos. 19, 27 and 28 together. Government consideration of the approach to burden sharing will be further informed by the outcome of the important capital assessment exercise currently being undertaken by the Central Bank as well as international developments on burden sharing.

As Deputies will be aware, the prudential capital assessment review, PCAR, exercise to determine the capital needs of the Irish banks is being carried out by the Central Bank and will be concluded by the end of this month. While the work is at an advanced stage it is not yet complete. Deputies will appreciate that it is essential that the results of this exercise are, and are seen to be, the outcome of a detailed and rigorous process undertaken on a wholly independent basis by the Central Bank. I have no information available to me which would allow me to speculate about the eventual outcome of the PCAR nor would it be appropriate for me to speculate on what it might be because there is a significant degree of market sensitivity in this area.

The Government has made clear that based on the results of the PCAR it will then assess how the capital needs of the banks should be met to ensure that international market confidence in the Irish banking system can begin to be restored. In this context, a key priority of Government in line with the programme for Government is to maintain the creditworthiness of the State. Therefore, the overarching objective must be to ensure that all appropriate options for supporting debt sustainability are factored into the Government's decision making process.

Deputies will appreciate that at this juncture while we await the results of the PCAR it is not possible, nor would it be prudent, to debate in detail the options open to Government. Naturally, it is the case that the issue of appropriate burden sharing comprises one of a range of important issues we are discussing with our European partners. These discussions are sharply focused on ensuring that the implementation of the EU-IMF programme agreement - the objectives of which we are strongly committed to achieving - is fully consistent with ensuring that a sustainable path for our debt in the future and our return to market funding for the State and for the banks in due course.

While the debate at EU level is, for now, focused on the issue of debt restructuring in the context of sovereign debt, from an Irish perspective, given that sovereign and bank debt are so closely linked, the wider debate at international level on burden sharing of bank debt is of equal importance.

On bank debt, several international organisations including the EU Commission, the Financial Stability Board and the Basel Committee on Banking Supervision are currently investigating the potential for various forms of burden sharing or "bail-in" tools such as debt write-downs, debt for equity swaps and contingent capital. There is not yet a clear international consensus as to the specifics of how such tools should work in practice. The Government is giving close attention to this issue to ensure that the cost to the taxpayer of supporting the banking sector can be kept to an absolute minimum.

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