Sandra McLellan (Cork East, Sinn Fein)
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Question 6: To ask the Minister for Finance if he will detail the total amount of money required by Irish Bank Resolution Corporation from the Exchequer to enable IBRC to pay their total liabilities to the Central Bank of Ireland in full; and if he will make a statement on the matter. [9957/12]

Brian Hayes (Dublin South West, Fine Gael)
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The Central Bank of Ireland does not disclose the value of the IBRC's liabilities to it. However, details of Anglo Irish Bank's primary sources of funding are disclosed in the former bank's interim report for the six months to 30 June 2011 which are accessible at the following link. The accounts will be updated in the IBRC annual report and accounts for 2011 due for publication at the end of March.

As at 30 June 2011 the figure for the Anglo Irish Bank interim accounts, adjusted to include an estimated figure for the INBS, was about €45 billion for deposits from banks, primarily central banks, which provides an approximation of the total liability of the bank to the Central Bank at the time. This figure is expected to reduce to circa €40 billion in the annual accounts which represents the gross cost to the Exchequer to repay the liability to the Central Bank of Ireland as of that date.

In addressing the question of the net amount that would be required by the bank from the State to pay the total liability to the Central Bank of Ireland it is necessary to look at how the work-out of the remaining assets and liabilities might provide some offset to the liability to the Central Bank of Ireland. At this time it is not possible, with any degree of accuracy, to indicate what the figure, if any, might be. The restructuring plan agreed between the Irish authorities and the European Commission required the IBRC to be capitalised for a work-out of the assets over ten years. The capital provided for the IBRC by the State totalled €34.7 billion which was financed by €4 billion in cash, €100 million for the special investment share and €30.6 billion, that is, €25.3 billion for Anglo Irish Bank and €5.3 billion for the INBS, in the promissory note which carries an interest coupon. The amount of money required by the IBRC to repay total liabilities, including liabilities to the Central Bank of Ireland, over this period is subject to material uncertainty and market factors which include the expected timing of asset recoveries and sales, which are dependant on property prices, especially in the United Kingdom and Ireland; the volume and timing of maturing funding commitments and deposits; and projected interest rates within the euro area. http://www.ibrc.ie/About_us/Financial_information/Latest_interim_report/Interim_Report_2011.pdf.

Pearse Doherty (Donegal South West, Sinn Fein)
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I tabled this question following from the presentations made to the Joint Committee on Finance, Public Expenditure and Reform, to ascertain the schedule of repayment of the promissory note which takes us right up to 2031. Because of the way the Government has booked the interest on that promissory note, which was at the market value at that time, Irish Bank Resolution Corporation does not need that total sum of €47 billion to clear all of its liabilities and the actual sum is probably much less, in the region of €37 billion. The argument being put forward is that the State, even if it was to get no change in terms of the promissory note, would not be still paying the promissory note post-2022 or - allowing for variances on impairments, and so on - 2023, but that the amount of capital that Irish Bank Resolution Corporation needs is in the region of €37 billion, not the €47 billion to pay all of the bank's liabilities. Hypothetically, if the Minister was able to sign a cheque today for €37 billion to Irish Bank Resolution Corporation, and it could sell its other assets to clear some of its other liabilities, we could wind the bank up with nearly immediate effect, and that is the point to which I am trying to get.

Brian Hayes (Dublin South West, Fine Gael)
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I was aware that the three economists in question raised this issue in the course of their presentation to the committee, but the three economists do not have access to the books of Irish Bank Resolution Corporation and how they can make that definitive statement is difficult to attain.

I understand Deputy Pearse Doherty's point. He is correct that when the promissory note procedure was put in place there was an average set out for the period of time, but, as he will be aware, that goes up or down. In trying to calculate with any degree of accuracy the total amount involved, Deputy Doherty, for the information of the House, gave the figure of €37 billion. It could be less than €40 billion. Who knows? In the circumstances of where we are at present, it is impossible to be definitive.

I also make the point, of which Deputy Pearse Doherty will be well aware, that much will also depend upon how much of this stuff we can sell. He is probably aware of a very substantial sale of these assets last year in the United States which was able to realise quite a considerable portion.

The variables will be: how much we can get rid of and where that interest rate will be. That is why it is difficult to be definitive at this stage. We are working at a process that has still another ten years to go.

Pearse Doherty (Donegal South West, Sinn Fein)
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Given that Irish Bank Resolution Corporation is owned by the State and the Department of Finance is the Department which, on 31 March this year, will sign a cheque for €3.1 billion to that bank, I presume that there are talks between both of them on how much this will cost and the cut-off point for this promissory note. Given that the Minister for Finance, Deputy Noonan, had the talks with Mr. Trichet and Mr. Rehn on 17 September last to set up these technical talks, I presume that such information is already available. Five months on from the agreement to have these technical talks on the promissory note, the least we would have is a good assumption - that is all it can be - of the total cost to the State. Wrapping everything up together, what is the amount the State needs to transfer to Irish Bank Resolution Corporation to meet its liability?

Brian Hayes (Dublin South West, Fine Gael)
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These are estimates and they are ball-park figures. The Deputy can be absolutely assured that in our discussions, both with our international funders and the ECB, in particular, these matters are being kept under review.

However, I would be unwise to speculate either as to the range of that or the total liability concerned at this stage, because even if we were to be successful in the redesign of the promissory note, there are a number of areas that must be considered. One does not want a situation where a redesign in the long run would be more difficult for us by virtue of the fact of changing interest rates. Those are the kind of issues that must be sorted.

However, I accept what Deputy Pearse Doherty is saying. There is a necessity to make progress on this and that is what we are working hard to achieve.

Michael McGrath (Cork South Central, Fianna Fail)
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As the Minister of State will be aware, the recapitalisation of Anglo Irish Bank was based on an estimate of its losses - somewhere in the range of €29 billion to €34 billion. Some months ago, the chairman of the bank, Mr. Alan Dukes, revised that estimate, stating that it could well be as low as €25 billion. The picture has become somewhat clearer recently with the sale of a substantial element of the bank's loan book portfolio. Is €25 billion the Government's current best estimate of the overall cost, aside from the promissory note structure, of the losses at Irish Bank Resolution Corporation?

Brian Hayes (Dublin South West, Fine Gael)
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I note that Deputy Michael McGrath referred to information that was put out there by the chairman at the time, and that is the bank's view. Here again, this will depend on the functioning property market. As the Deputy will be aware, much of the assets involved were purchases here in Ireland, but also in the United Kingdom. As they are sold over a period of time, and as that is reflected in the ultimate price, we will get a better knowledge of this. Deputy Michael McGrath wants me to commit to what the chairman said and I am not in a position to do that.