Stephen Donnelly (Wicklow, Independent)
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To ask the Minister for Finance if he will identify the unsecured AIB bondholders who were paid €1,000,000,000 earlier in the week; the steps he has taken to date to identify them; and if he will make a statement on the matter. [42591/12]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy is aware, and while recent media reports may suggest the identity of particular bondholders, the bank or Government has no substantive means of establishing the underlying ownership of these securities, which are freely tradeable once issued. These securities are publicly traded and dealt through market participants and settled by clearing house systems. An issuer does not have any access to the records of the clearing house. On maturity, the bank will instruct its paying agent to transfer the funds due to the clearing house, which will then distribute the funds to the holders of the securities as per their records. Even where the bank is presented with lists alleging to represent names of bondholders, I am informed there is no way for the bank or anyone else to completely verify the accuracy of such lists.

The Deputy will also be aware that when this Government took office it attempted to enforce burden sharing with senior unguaranteed bondholders in particular institutions that were no longer core elements of the Irish financial system. Intensive discussions were held with our European partners, in particular former President of the ECB, Mr. Trichet, in the run-up to the announcement of our stress tests on 31 March last year. Mr. Trichet believed at that time that such action was not in the interests of Ireland or the euro area. This matter was discussed again with former President Trichet on a number of occasions, including the ECOFIN meeting in Poland in September 2011.

I would also like to point out the differences between AIB and other non-core institutions currently in wind-down. The Deputy will be aware that AIB is a solvent, well capitalised Bank with an important mandate to supply credit and essential banking services to Irish Individuals, SMEs and businesses across the country. It is, therefore, important that its business model remains intact so that it can eventually regain access to international funding markets in a meaningful way and eliminate its dependence on the Government. This will also have the effect of enhancing its value for the State at a time of divestment. I note the bank’s successful re-entry to the public bond markets since the crises began, where it raised £395 million in May of this year, using UK residential mortgages as collateral. Nevertheless, I would like to again reiterate that the Government is currently in discussions with our European colleagues in regard to securing a deal on the Irish bank debt and further detailed work will be stepped up to ensure that the positive moves in Europe are harnessed to maximise the benefit to the Irish taxpayer.

Stephen Donnelly (Wicklow, Independent)
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The Minister made various points, to which I will try to respond. The scale of the €1 billion paid out, at current borrowing costs, is €60 million per annum forever. That is what it would cost us to fund €1 billion, which is equal to what it would cost to pay 2,400 new teachers every year forever.

The Minister said that former ECB president, Mr. Trichet believed it was not in Ireland's interest not to pay these bondholders. I accept the Minister would prefer not to pay them. However, I do not care what Mr. Trichet thinks is in the best interests of Ireland. I believe he is single-handedly responsible for a great deal of Europe's economic problems. I do not care what he thinks is in the best interests of this country rather I care what the Minister and Taoiseach think in this regard. The fact that Mr. Trichet believes we should pay the bonds is irrelevant.

On the substantive question of who are the bondholders, I do not know who is advising the Minister but his claim now that they cannot be identified is patently untrue.

In December 2010 the Minister called on Brian Lenihan to identify them and he went so far as to give him the name of a website he could visit to see who had bought the shares. Greece and Iceland managed to find out who the bondholders were and US banks regularly find out the identity of bondholders. It is not that difficult. It has nothing to do with clearing houses, or Anglo Irish bank and AIB finding it too difficult. The Minister can call a creditors meeting and they will let him know who they are because they must engage with him to get their money. I do not know who is providing the Minister with this advice but it is contrary to what he stated as Minister for Finance in waiting approximately two months before the election. It does not seem to be beyond the ability of a range of other countries and financial institutions to find out who they are.

Michael Noonan (Limerick City, Fine Gael)
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I outlined to Deputy Doherty my position on burden sharing with senior bondholders and it remains the same. I would like to do it but I will only do so in agreement with the European Central Bank. Deputy Donnelly has a different view. He believes the Government should move unilaterally and, in effect, refuse to pay through the agency of AIB. However, we need AIB to be a working pillar bank for the economy and if we followed his advice it would have defaulted, so we did not have a choice. Deputy Donnelly's position is not fully thought out. He is applying now the type of formula that might have been desirable for Anglo Irish Bank in 2010 to a working bank such as AIB on which so many people are dependent.

On the issue of the identity of the bondholders, I challenged the late Brian Lenihan in the Dáil on their identity, because at the time a website had published a list of names which purported to be the bondholders. However, this list was never verified and at a minimum it was probably incomplete. I am giving Deputy Donnelly the answer he gave in the same terms.

Perhaps the website had a very large degree of accuracy on the identity of the bondholders, and I have no doubt some of the names mentioned in the newspapers recently as AIB bondholders were correct, but there is no way of verifying a complete list of bondholders other than the method Deputy Donnelly mentioned, of calling a creditors meeting. However, as soon as one brings the creditors together, one has taken an irrevocable step of going towards default. One can shake it out but one has gone beyond the point of no return. If Deputy Donnelly visits euroclear.com or clearstream.com he will see the transactions because they are holding agencies for the bonds. It is possible to make assumptions because of the trades but I do not have access to a complete list which would verify who the bondholders are in any particular institution, principally because they get sold on and the original bondholders usually are not the bondholders who are extant.

Stephen Donnelly (Wicklow, Independent)
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On the repayment of the bondholders, the logic the Minister has just given is Fianna Fáil economics, which is that we need to borrow and therefore we will pay off all of these debts because if we do not, people will not lend to us. Exactly the opposite is true and my position is very well thought through. Fianna Fáil's position was not thought through and I suggest the Minister's position is not thought through. By paying off everybody's debts, which the new AIB does not owe because it was taken over by somebody else when it was bankrupt, one removes the ability of AIB to borrow further. This is exactly the incorrect logic that ended us up in a troika programme.

On the identity of the bondholders, I appreciate the Minister's acceptance that he could call a creditors meeting and could find out who they are. I believe it is reasonable to tell the people of Ireland who are stumping up this money that we did not know who they were so we called them in. The Minister does not even have to say they will get a writedown. He can say that before they are paid we want to know who they are because we have stepped in to cover the debts. It would be the right thing to do for the people of Ireland as a minimum step to let them know to whom they are paying their money.

Michael Noonan (Limerick City, Fine Gael)
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Is Deputy Donnelly seriously suggesting that AIB, which is in recovery and as one of the pillar banks financing the economy, should have defaulted on money it raised in 2009 and called its creditors together and gone bust?

Stephen Donnelly (Wicklow, Independent)
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This was unguaranteed. It was not 2009.

Michael Noonan (Limerick City, Fine Gael)
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Is Deputy Donnelly seriously suggesting this would be a prudent course of action?

Stephen Donnelly (Wicklow, Independent)
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No. The Minister's information is incorrect. It was not 2009.

Michael Noonan (Limerick City, Fine Gael)
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It is a ridiculous proposition.

Stephen Donnelly (Wicklow, Independent)
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It was an unguaranteed bond which means it was before September 2008. Does the Minister not even know the difference between a guaranteed and an unguaranteed bond?

Michael Kitt (Galway East, Fianna Fail)
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Deputy Donnelly please. The Minister has the floor.

Stephen Donnelly (Wicklow, Independent)
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Does the Minister think he just paid a guaranteed bond? Is this what Minister is saying?

Michael Kitt (Galway East, Fianna Fail)
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The Deputy cannot speak when the Minister has the floor.

Michael Noonan (Limerick City, Fine Gael)
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The bogus bonds issued by Deputy Donnelly were not guaranteed.

Stephen Donnelly (Wicklow, Independent)
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That is ridiculous.

Michael Kitt (Galway East, Fianna Fail)
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The Minister is replying.

Michael Noonan (Limerick City, Fine Gael)
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The Deputy was involved in a publicity stunt.

Stephen Donnelly (Wicklow, Independent)
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Did the Minister just suggest that what was paid with a guaranteed bond?

Michael Noonan (Limerick City, Fine Gael)
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A populist publicity stunt on the pretence he is knowledgeable on these matters.

Stephen Donnelly (Wicklow, Independent)
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Is the Minister for real? Does he believe the €1 billion cheque he paid on Monday was to guaranteed bondholders?