Dominic Hannigan (Labour)

From the Minister of State's speech. He stated:

The two recapitalised banks will not commence court proceedings for repossession of a principal private residence until after 12 months of arrears appearing, where the customer continues to co-operate reasonably and honestly with the bank.

It is not at all clear what "reasonably" means or how one defines "honestly". Who will define these terms? I would be loath to allow the bankers themselves to define both terms given the mess they have got us into.

Yesterday, the Master of the High Court said he was so concerned about recent job losses that he expected an avalanche of repossession cases to come before him. He has seen a dramatic rise in such cases in recent months. The Minister of State also said:

The recapitalised banks have also assured Government that in the normal course of events they will make every effort to avoid repossessions, as has been evidenced by the low level of repossessions by them to date.

As I said, however, the Master of the High Court is indicating that he is seeing a large rise in applications for repossessions. I am concerned about that and I am disappointed that the opportunity was not taken to extend that period to 24 months because people are losing their jobs every day. There has been a horrible announcement at Dublin Airport today concerning the loss of 1,200 jobs in SR Technics, and we also saw the impact on Waterford Wedgwood at the start of the year. People have made significant contributions throughout their working lives to the tax base, but their taxes are now being used to bail out these banks. We must ensure therefore that their homes are not put at risk and that we bear with them through the rest of this economic depression. We must not put their homes in danger of repossession. That is a missed opportunity because I would like to have seen a longer moratorium period.

I also want the Minister to clarify the return that will come to the State from investing this money in these banks. The Minister of State said:

The banks can redeem the preference shares to the State at par value [which means face value] within the first five years, and at 125% of face value thereafter. Warrants for the purchase of shares also give the State an option to purchase in five years[' time.]

Can we exercise the warrants before five years are up? This statement does not say that. It says we can exercise the warrants "in five years". I am concerned that in four years' time, if the shares happen to rise, the banks will just buy them back at par value and in effect there is no upside for the State. If the value of the shares rises or even doubles within the next four or four and a half years, the banks will redeem the shares at face value. They will not wait a further six months before we can come along and exercise our warrants. It may just be a slip-up in the wording but, as I read it, it seems to indicate that we are unable to exercise these warrants until five years have expired.

I am also seeking clarification on what the strike price of those shares will be. The speech states that they can be bought back "at predetermined strike prices, which are based around the current market share prices". Why does it not say "which are based on the current market share prices"? The word "around" could be 20% or 50% out. I do not know, so I am seeking clarification on those points.