Joan Burton (Dublin West, Labour)
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Question 74: To ask the Minister for Finance the discussions that have taken place with the Irish banks and the Irish Bankers Federation in respect of schemes of support for the liquidity of the banks, particularly in respect of mortgage loans and other construction-related borrowing, as indicated by the comments of members of the banking delegation to the Joint Committee on Finance and Public Service; the arrangements under consideration; the approaches made by the banks to the Government, Central Bank, and the Financial Regulator; and if he will make a statement on the matter. [29001/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Deputy's question may refer to the discussion at the Joint Oireachtas Committee on Finance and the Public Service on 2 July last with representatives of the banking industry and in particular to comments on the German mortgage banking Pfandbriefe model and its Irish equivalent Asset Covered Securities (ACS). As the Deputy may be aware we already have a robust and effective legislative framework in place in Ireland for ACS since 2001. This legislation which is considered an example of international best practice in this area was updated last year. It is one of the several mechanisms currently used by Irish banks to meet their funding needs. Those amendments were made early in 2007, and hence obviously were unconnected to the financial turmoil later that year. They were technical changes aimed at ensuring that the Irish legislative and regulatory basis for the issuance of covered bonds kept its place at the leading edge of international financial services. No further adaptation of our Asset Covered Securities(ACS) legislation is immediately required or planned.

As explained at the Joint Committee on Finance and Public Service, this kind of legislation draws its inspiration from the German Pfandbriefe model, originated about 150 years ago. The ACS mechanism serves as an additional source of diversified funding for participating banks. Put simply, it enables banks to offer highly regulated low risk bonds that are attractive to investors because they are backed by high quality assets. The fact that we put this legislation in place has provided a useful addition to the funding mix of our institutions.

As far as bank lending is concerned, the Deputy will note from the proceedings of the Joint Oireachtas Committee meeting that the bank representatives stressed that the Irish banks remain open for business and substantial mortgage lending is continuing to take place. As far as the overall position of the banking sector is concerned, the recent report by the credit rating agency Standard and Poor's concluded that the Irish banking system remains solid and is underpinned by good profit margins, sound liquidity and capitalisation.

More generally, as the Deputy would expect,members of staff of my Department and I would often have opportunities for discussions with business and their representative bodies. However, as I stated earlier this week, no scheme of the type mentioned has been submitted for my consideration. If there are specific proposals made, I will of course have them examined.