Kieran O'Donnell (Limerick East, Fine Gael)
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Question 94: To ask the Minister for Finance his plans for Anglo Irish Bank; the prospect for a return on his investment to date; the opinions of the EU from a State aid perspective; and the adequacy of the bank's business plan. [38096/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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As the Deputy will be aware, on 26 June 2009 the European Commission approved, under EU treaty state aid rules, a recapitalisation of Anglo Irish Bank of €4 billion.

The State investment occurred in the form of ordinary shares to help preserve an adequate level of core tier 1 capital. Part of the recapitalisation was used to buy back at a significant discount certain outstanding subordinated loans Anglo Irish Bank had issued in previous years, to provide further support for the bank's capital position.

As highlighted in the Commission decision, the recapitalisation of Anglo Irish Bank was required as a matter of urgency to preserve the financial stability of the bank, which is of systemic importance. The recapitalisation was accepted by the Commission as appropriate to remedy Anglo Irish Bank's solvency problems at that time, maintain confidence in the Irish financial system overall and remedy a serious economic disturbance that would otherwise have been expected to arise.

The aid was approved as a rescue measure on the basis of a commitment to submit a restructuring plan for the bank by the end of November 2009. The board of Anglo Irish Bank is currently preparing the restructuring plan, which will consider all options for the future of the bank. In advance of the finalisation of the plan and its submission to me, it would not be appropriate for me to comment further on the plan.

As I stated on Second Stage of the NAMA Bill in the Dáil on 16 September last, it is likely that some institutions will require additional capital in order to absorb the losses arising from the transfer of their impaired assets to the agency and in order to maintain appropriate levels of capital. I made it clear that the Government would expect such an institution to explore all available options for raising such capital as it is the Government preference that private market solutions are found and implemented.

However, to the extent that sufficient capital cannot be raised independently or generated internally, the Government remains committed to providing such banks with an appropriate level of capital to continue to meet their requirements. This will be done in a manner consistent with EU state aid rules and the credit needs of the Irish economy. I recently confirmed this position to the Financial Regulator in the case of Anglo Irish Bank to facilitate the regulator in granting that bank derogations from certain regulatory capital requirements.

Kieran O'Donnell (Limerick East, Fine Gael)
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Does the Minister seriously think that private investors will come over the mountain for Anglo Irish Bank? He did not answer the question. The Minister told the European Commission he would get no return from the €4 billion which was put into Anglo Irish Bank by way of recapitalisation.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Not as bluntly as that.

Kieran O'Donnell (Limerick East, Fine Gael)
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Perhaps the language is plainer but the essence of the point is the same. The Minister will effectively get no return. He is now talking about putting another €20 billion into Anglo Irish Bank by way of NAMA, which makes €24 billion of taxpayers' money that will see no return. The EU has been clear in regard to state aid rules. Either this is an orderly wind-down or there should be a proper business plan for restructuring to take place.

Since last May, we have seen no figures in respect of Anglo Irish Bank, which we own - the May figures applied for the period up to 31 March. We have seen the figures up to 30 June for AIB and Irish Life & Permanent, and up to 30 September for Bank of Ireland. The people are entitled to know what is happening with regard to Anglo Irish Bank. The Minister should accept that the bank needs to be wound down in an orderly way, that he cannot get a return for the taxpayer and that he would be putting good money after bad with any further investment in the bank.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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No, I do not accept what Deputy O'Donnell says because it is not a policy that is capable of implementation. What is capable of implementation is, first, what has been required since last February, namely, that the bank be stabilised. The effect of the National Asset Management Agency approach will be to stabilise Anglo Irish Bank. Whatever bonds are issued on foot of that are issued by the Irish State but they are issued for valuable consideration, namely, the assets for which they are taken.

Kieran O'Donnell (Limerick East, Fine Gael)
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They are of dubious value.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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NAMA, for all practical purposes, amounts to a bad bank in the case of Anglo Irish Bank. The completion of the NAMA exercise will then enable the making of a strategic decision in regard to the direction the bank should take.

Given the character and size of the risk the bank posed to the economy since last February, the downsizing of the loan books, which NAMA entails, will be a welcome development on world markets and with the European Commission. Building on that, at the conclusion of that exercise - because it stabilises the bank and puts it in a position to fund itself - a decision can then be taken about the strategic direction the bank should take. The Deputy must remember that if we continue the orderly wind-down which he advocates in regard to that part of Anglo Irish Bank which is not part of the NAMA process and which remains in the bank, the certainty that the taxpayer will be at a loss is accelerated rather than diminished.

Kieran O'Donnell (Limerick East, Fine Gael)
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The Minister made the argument that one must take account of the credit needs of the Irish economy in terms of any recapitalisation of the banks. Anglo Irish Bank, into which €24 billion will shortly have gone, will provide no credit. The bank is not systemic for the banking system in the economy. Does the Minister not, therefore, think it appropriate at this stage in terms of value for money for the taxpayer to commence an orderly wind-down of the bank?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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All of these questions can be weighed up on the completion of the NAMA process but, as I said earlier, the rapid wind-down of a bank of this type, after the removal of the at-risk assets in it, will only accelerate a loss to the taxpayer.