Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

As the Deputy is aware, the Government has been working extremely hard to secure a deal on the Irish bank debt and detailed work will continue to ensure the positive moves in Europe are harnessed to maximise the benefit to the taxpayer. This remains one of the Government’s key priorities. We will continue to target the reduction of the burden to the State of funding the bank recapitalisation and due consideration is being given to various mechanisms to achieve this goal. On 19 July 2012, the National Pensions Reserve Fund, NPRF, published its annual report. This contained an accounting valuation of the NPRF's ordinary and preference shareholdings in Bank of Ireland and Allied Irish Banks at 31 December 2011. As at 31 December, the NPRF accounting valuation of its investments in Irish banks stood at €8 billion. Its investments in AIB at this date were valued at €6.1 billion comprising preference shares of €2.2 billion and ordinary shares of €3.9 billion. Its investments in Bank of Ireland were valued at €1.9 billion consisting of preference shares of €1.5 billion and ordinary shares valued at €0.4 billion. In addition, the State holds direct equity investments in the Irish Bank Resolution Corporation, IBRC, and Permanent TSB, now separated from Irish Life. The State also invested €3 billion in contingent capital instruments across the banks which are scheduled to be repaid to the State in 2016.

Given that the State may enter discussions on these investments, it would be inappropriate for me at this point to provide further details on any valuation assessment of these instruments. I would acknowledge, however, that since the end of last year, banking shares have rallied strongly across Europe and the share price of Bank of Ireland has benefited from this positive sentiment, rising by 18%.

With regard to the promissory notes, and as previously advised to the house, ongoing discussions with the troika are considering all options for the restructuring of the notes in terms of the source of funding, the duration of the notes, the interest rate applicable.

The very welcome euro area summit statement of 29 June represents a major shift in European policy in terms of breaking the vicious circle between the banks and the sovereign. More recently, with the announcement on 12 September of a single EU banking supervision mechanism, the European Commission President outlined his vision for the banking sector, in which the ECB would be given supervisory powers over all banks in the Union, which is an important step with regard to the ESM and its potential to recapitalise banks.

It is not possible to give guidance on the timing of these negotiations as to do so could impede our ability to achieve the best possible results for the Irish taxpayer, but every effort is being made to expedite the ongoing process.

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