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

The State has no interest in owning or operating banks. It was because of the catastrophic situation in which we found ourselves that the State had to put capital into the banks and take a shareholding in them. It has always been the policy to recover the taxpayers' money in so far as we could. Up to €1 billion was put into CoCos, contingent capital notes, and we recovered it in full in accordance with that policy. The taxpayer has lost nothing and has, as a matter of fact, gained €10 million on the transaction.

Regarding the issue of the coupon, in any investment one measures risk by the interest rate charged. I mentioned the investment and the ESM, European Stability Mechanism. The reason one had to pay a small commission to get into that mechanism was because there is no risk to one's money. The reason one gets 10% on CoCos is because there is a very significant risk. If the capital holding in the bank were to decline below 8.5%, the CoCos get automatically transferred into equity. As soon as that happens, bad debts can burn it up. One can lose one's full capital as a result. That is why one gets 10%. The interest rate always measures risk. The lower the interest rate, the lower the risk. The higher the rate, the higher the risk.

In my judgment, it was a good idea to take the taxpayers' money out in full even though if we continued with the risk, there would be an annual yield. That was my judgment call. Other people can argue it other ways but I believe the taxpayer has had enough of risk over the years. If I can get money out at par through preference shares or CoCos – there is quite a lot of them through the system – I will sell at par. That is because any arrangement we can get from Europe, I do not believe we will get it at par.

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