Enda Kenny (Mayo, Fine Gael)

Compulsory burden sharing for unguaranteed and unsecured senior bondholders in wind-down banks requiring additional capital was considered in the first half of 2011. Government discussions with the troika resulted in a change of direction in that regard with the priority now being to seek a reduction in the cost to Irish taxpayers of the long-term financing through the IBRC promissory notes for the bailout of IBRC's creditors. Discussions are clearly ongoing. The latest €3.6 billion instalment on the promissory note was settled with a 2025 Government bond rather than cash. As I pointed out, what may arise in other countries in their banking sectors may well have an impact in dealing with this matter by an alternative method. The Government cut the cost to the taxpayer of recapitalising the covered banks from an initial estimate of €35 billion in the programme of support to €16.5 billion through a combination of avoiding asset fire sales, burden sharing with junior bondholders and securing private capital investment in the State. In addition, the State is committed to acquiring Irish Life for €1.3 billion to complete the recapitalisation of Irish Life and Permanent. It is expected that the proceeds from the onward sale of Irish Life in due course will reduce the amount the State has committed to bank recapitalisation. The Central Bank and Credit Institutions (Resolution) Act 2011 puts in place a special resolution regime for future bank insolvencies.

See this speech in context