Deirdre Clune (Cork South Central, Fine Gael)
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Question 63: To ask the Minister for Finance if a recapitalisation request from Anglo Irish Bank has been communicated to him; and his view on the performance, the challenges and the future for the bank. [19027/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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My Department is in ongoing discussions with Anglo Irish Bank on a range of matters, including the bank's capital position. The Government has stated that support will be provided as necessary to Anglo Irish Bank, consistent with EU state aid requirements. As the Deputy will be aware, Anglo Irish Bank was taken into public ownership to ensure the stability of the bank and the financial system generally on foot of serious concerns regarding corporate governance and in a context where the funding position of the bank had weakened due to low market confidence in the bank's monoline business model.

With the stability provided by full State ownership, and with a new board appointed at Anglo Irish Bank, the bank is now in a position to address the issues it faces, including the development of a revised business model, to restore market confidence. It is likely that Anglo Irish Bank will need additional capital but the extent and the timing of that need is still being assessed and discussed. Deputies will recall that prior to the nationalisation the Government had envisaged investing €1.5 billion capital in Anglo Irish Bank. In this regard, the board of Anglo Irish Bank is currently preparing a new business plan for the bank, which will be required to demonstrate how the board will oversee the operation of Anglo Irish Bank in the best interests of the State and the taxpayer.

Richard Bruton (Dublin North Central, Fine Gael)
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Has a report of stress testing of the impaired loans in Anglo Irish Bank been made to the Minister or has he received, either in oral or written form, a report on the stress testing of its loan book? Have any loans been written off to date by Anglo Irish Bank? Given the newspaper reports of €2.5 billion being a recapitalisation requirement, has this figure been reported to the Department of Finance and is it a likely assessment of the scale of recapitalisation that will be required? When will we see reports in the public domain on these issues?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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An exact figure has not been reported to my Department. The matter is still under examination at my Department and the relevant information will be provided as it emerges.

In regard to the review of the loan books, Anglo Irish Bank is currently finalising its half-year accounts to be published at the end of May. As part of the preparation for the publication of these accounts, I understand that Anglo Irish Bank conducted a full internal review of its loan book. At the request of my Department, the Financial Regulator arranged for PricewaterhouseCoopers to examine Anglo Irish Bank's loan book and to report on the extent of the impairment provisions required in its half-year accounts. That report has been received and we are in discussion with Anglo Irish Bank about it.

Richard Bruton (Dublin North Central, Fine Gael)
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Does the Minister have that report?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The report has been received.

Richard Bruton (Dublin North Central, Fine Gael)
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Will the Minister tell us anything about it?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I do not have further details of that report to hand but it has been received and we are in discussion with the board of Anglo Irish Bank about it.

Joan Burton (Dublin West, Labour)
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Does the Minister now regret that the proposal which was on the table on the night of the bank guarantee to nationalise Anglo Irish Bank because of its financial position was not taken up at that time and that, instead, Anglo Irish Bank was included in the guarantee and was in many ways the cause of fundamental damage to our reputation and to the two main banks, Bank of Ireland and Allied Irish Banks? Second, does the Minister have a figure as to what the capital losses sustained by Anglo Irish Bank have been and whether the bank has in effect exhausted its capital?

Third, the Government was in effect considering guaranteeing bonds up to 2014 in certain instances - the Minister made reference to this in his Budget Statement but never elaborated on it. If Anglo Irish Bank has bonds due, does this mean, in effect, that the Minister has extended the guarantee period out to 2013, particularly for international bond holders? Will the Minister explain the impact of this for Anglo Irish Bank? Is it true some €30 billion or more of distressed assets are to be transferred from Anglo Irish Bank to be bailed out by NAMA? What is the story in that regard?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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There are so many assumptions in the Deputy's questions that I wonder where to begin. NAMA is being established under the aegis of the National Treasury Management Agency. In bailing out Anglo Irish Bank it is bailing out the taxpayer, because the taxpayer now owns Anglo Irish Bank. Therefore, I do not see the relevance of the use of the word "bailout". The transactions that will take place between NAMA and the Anglo Irish Bank are transactions in which, in effect, distressed loans will be removed from the balance sheets. I am not in a position to put a figure on the record of the House this afternoon about the extent of that distress because we have not completed the valuation exercise for NAMA purposes. We are at the stage of establishing what the valuation procedure will be.

I am glad the Deputy asked me about the extension of the guarantee and the bonds. The reason the guarantee is proposed to be extended to medium term debt is that, as the Deputy is aware, the guarantee terminates at the end of September 2010 and the main banks have difficulties in accessing medium term debt financing beyond that period because of the total character of the cut-off date. It is not a matter, however, of guaranteeing existing subordinated debt or debt of that character which is an issue, but a question of assuring medium term finance is available to financial institutions. This course of action has been taken by many other European countries, as have all of the different courses of action we have taken, including giving the guarantee, capitalisation and nationalisation where appropriate. All these steps have been taken by countries throughout Europe to deal with the major crisis in the financial system, which will do incredible damage to our economies if it is not addressed.

On the specific question the Deputy asked about medium term finance, the answer is that the Government is working on proposals that will require approval from the European Commission. They will assure the various financial institutions in Ireland - in a currently improving money market - that they can access greater funding. This is very important for sustaining the viability of the banks and for the banks giving credit into the economy.

With regard to the suggestion that the Anglo Irish Bank should have been nationalised a few months before it was, it is clear from the discussion we are having today that when a bank is nationalised, the obligation to provide working capital for the bank rests on the taxpayer. I was determined to do all in my power to stave off that eventuality. The taxpayer has not had to commit a cent to the Anglo Irish Bank to date. Whether it would have been preferable to have nationalised the bank last September and immediately commit several billions of euro to it is a matter historians can debate. The course of ensuring the viability of the whole system as long as possible and using total nationalisation as a last resort was the correct route to follow.

Kieran O'Donnell (Limerick East, Fine Gael)
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What level of new business has been written by Anglo Irish Bank since it was nationalised? Will the Minister confirm that Anglo Irish Bank will be covered by NAMA, as his reply was somewhat vague?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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My reply was not vague. Of course Anglo Irish Bank will be covered by NAMA, because it is owned by the taxpayer. What I was pointing out clearly, when Deputy Burton used the word "bailout", was that Anglo Irish Bank is now owned by the State - the taxpayers. The valuation procedure as between NAMA and Anglo Irish Bank carries no risk for the taxpayer whatsoever.

Kieran O'Donnell (Limerick East, Fine Gael)
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How much new business has been written by Anglo Irish Bank since it was nationalised?

Brendan Howlin (Wexford, Labour)
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If the Deputy would wait to be called, we could have an orderly Question Time. It is normal that the Chair calls and the Deputy then rises and puts his question.

Kieran O'Donnell (Limerick East, Fine Gael)
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May I put the question now?

Brendan Howlin (Wexford, Labour)
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Yes. The Minister is endeavouring to answer and it is not good that the Deputy shouts him down from his chair.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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To answer the question, I do not have that information to hand. I accept new business has been limited in extent.

Kieran O'Donnell (Limerick East, Fine Gael)
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Can the Minister get the information?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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We can contact the board.

Joan Burton (Dublin West, Labour)
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Will the Minister make a statement available to the House with regard to his statement on medium term debt? What constitutes medium term debt? This is important because the Minister has indicated he is extending the guarantee for certain categories of debt until 2014. This is a major statement and the Minister needs to elaborate on it.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am not elaborating beyond what I said in the Budget Statement, because we are in discussions with the European Commission. Anything we do will be in line with practice that has taken place already in the United Kingdom, France and in many other European countries.