Simon Harris (Wicklow, Fine Gael) | Oireachtas source

The Minister for Finance agreed to the request of the Governor of the Central Bank for the payment of a financial incentive of up to €53.9 million to transfer the assets and liabilities, excluding the premises, of Newbridge Credit Union to Permanent TSB. All the assets and liabilities of the credit union, excluding the premises, were transferred to Permanent TSB pursuant to a High Court order dated 10 November 2013. The financial incentive agreement between the Central Bank and Permanent TSB comprises the following elements: €23 million in cash upfront to fill the hole in the balance sheet; restructuring and integration costs of €4.25 million; €2 million for other transferring liabilities; and a risk share on the transferring loans whereby the State will absorb 50% of the losses where loans perform below their transfer value and 50% of the gains where they perform above the transfer value. If the loans were written off entirely with no recovery, this would have resulted in an additional €24.7 million total cost.

I have been informed by the Central Bank that the position regarding the drawdowns to date and expected further expenditure from the agreement is as follows. Restructuring costs, which are payments to cover the establishment and maintenance of a recovery and underwriting platform for the Newbridge Credit Union loans, are capped at a possible €3 million. To date, €1.3 million has been drawn down. The Central Bank expects to incur a further €200,000 in such costs. Integration costs, which are payments to cover the costs of any redundancies of former Newbridge Credit Union staff, are capped at a possible €1.25 million. To date, nothing has been drawn down but the Central Bank expects to incur the full €1.25 million allocated to integration costs. Transferring liabilities are capped at a possible €2 million. To date, €300,000 has been drawn down. The Central Bank does not expect further drawdowns under this heading. Loss compensation payments are payments to Permanent TSB to cover deterioration in the performance of the Newbridge Credit Union loan book. The Central Bank has a 50-50 profit and loss sharing arrangement over a ten-year period with Permanent TSB in respect of these loans in order that the maximum cost the Central Bank can incur is €24.7 million if all of the loans defaulted. If the loans perform well, the Central Bank may have no liability under this heading or could actually be paid by Permanent TSB. Given the performance on the loan book to date, the Central Bank expects to incur some costs under this heading, although nowhere close to the capped amount.

In respect of offences committed or lessons learned, Section 33AK(3)(a) of the Central Bank Act 1942 requires the Central Bank to report information to other bodies, including An Garda Síochána, if it is suspected that a criminal offence has been committed by a supervised entity or that a supervised entity has contravened a provision of the relevant Act. The Central Bank commissioned a report from the liquidator examining the governance and management practices leading to the appointment of the special manager.

The Central Bank considered the liquidator's report in the context of whether any further action might be required and has concluded that no further regulatory action is required. The report will inform regulatory decisions of the Registrar of Credit Unions concerning those involved in the future.

On the current position regarding ownership of Newbridge Credit Union, as Minister of State with responsibility for the Office of Public Works I can tell the Deputy that the liquidator has signed contracts with the OPW to purchase the former premises of Newbridge Credit Union. This sale is expected to be completed formally within the first quarter of this year. As the Deputy rightly said, the building will provide important Intreo facilities in Newbridge which are about much more than the traditional dole office. Intreo is about getting people back to work. It is an important community facility.

In regard to the Deputy's approaches to the Tánaiste and me about community use of spare capacity within the building, my officials in the OPW and officials in the Department of Social Protection are meeting on that matter. Both Departments are positively disposed to examining ways the community can use any additional capacity once the Intreo services have been established.

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