Seán Barrett (Dún Laoghaire, Fine Gael)
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Question 11: To ask the Minister for Finance if new inter-agency management structures have been put in place to handle the banking crisis; and if clear lines of accountability have been put in place in respect of the responsibilities of respective agencies. [38728/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Credit Institutions (Financial Support) Scheme 2008 applies comprehensive control, monitoring and information provisions to the credit institutions covered by the scheme which will ensure enhanced coordination and close working between the Central Bank, the Regulatory Authority and my Department so as to ensure the realisation of the Scheme's objectives. This enhanced cooperation facilitates appropriate detailed information exchange, liaison with the Governor and Chief Executive of the Regulatory Authority as well as consultation on specific prudential aspects of the terms and conditions to ensure a consistent approach across all the relevant public bodies by reference to the objectives of the Scheme.

The implementation of the Scheme is subject to formal monitoring by the Governor and Chief Executive of the Regulatory Authority and its terms are subject to review from time to time, at no later than six month intervals. The Regulatory Authority has already advised me that, in light of the severe difficulties faced by credit institutions arising from the crisis of confidence in the global credit market, it will continue to intensify its on-site and off-site supervision of credit institutions. The scheme also provides that I will report to the Oireachtas Committee on Finance and the Public Service at six month intervals on the level of the charges received from covered institutions and in relation to compliance with the terms and conditions of the Scheme and progress in relation to the purposes of the Act of 2008.

The enhanced cooperation I have outlined is supported by clear obligations on covered institutions to submit reports to the Regulatory Authority in relation to a range of matters including liquidity requirements, capital ratios, asset quality, risk exposures and funding costs, and to provide such other reports as the Regulatory Authority may request at my initiative. There is also significant provision for the regulation by the Regulatory Authority, in consultation with the Minister, of the commercial conduct of the institutions participating in the Scheme.

The Government is satisfied that, alongside the powers provided directly under the scheme, the relevant public bodies and in particular the Regulatory Authority have the authority and legal power to take whatever steps are necessary to continue to look after the interests of all depositors and customers of the covered institutions as well as that of the State and the taxpayer.

I am satisfied that the close coordination and liaison arrangements put in place between the Central Bank, the Financial Regulator and my Department will ensure effective management of the Scheme in an integrated fashion by all of the bodies concerned as well as clear lines of accountability with regard to their respective responsibilities.

Tommy Broughan (Dublin North East, Labour)
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Question 12: To ask the Minister for Finance if he remains satisfied with the level of capitalisation of each of the Irish banks and credit institutions covered by the credit institution guarantee scheme; if his Department has drawn up a contingency plan in the event that a State injection of capital into the banks is required; and if he will make a statement on the matter. [38809/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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As the Deputy will be aware, we have put in place a wide guarantee for the banking system in Ireland. The legislative scheme setting out the terms and conditions for the guarantee to support the long-term viability of the banking system in Ireland and safeguard the interest of taxpayers has been approved by both Houses of the Oireachtas. It has also been approved as being in compliance with the European Commission's requirements and is now in place.

To date, the guarantee has been successful in stabilising the position of the banking system in Ireland during an unprecedented period in international financial markets. The overarching objective of the scheme is to remedy the serious disturbance that might otherwise have unfolded for the economy. It is about taking whatever steps are necessary to ensure that we have a banking system that as a whole works effectively, efficiently and competitively in facilitating all the day to day ordinary economic transactions of commercial, business family and social life.

The Scheme provides a detailed framework for the authorities to oversee and guide the assessment of strategic options by the banks. If it is the case that an assessment is made by a particular institution that higher capitalisation would be appropriate, it must consider all possible strategic options to meet this requirement. Each institution must take appropriate steps to ensure that their levels of capital are aligned with their needs. The State has a keen interest in the health and security of the banking institutions, because of their role in the economy. Clearly, my Department, the Central Bank and the Financial Regulator will be in continuing contact with the institutions on their business plans, their capital position and their liquidity.

As indicated the issue of their capitalisation is a matter for individual banks in the first instance, and I don't think it wise to get into theoretical discussions that might be market sensitive.

Martin Ferris (Kerry North, Sinn Fein)
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Question 13: To ask the Minister for Finance if, in view the recent losses announced by a company (details supplied) he has made contact with other major credit institutions to discuss their financial positions going forward; and if he will make a statement on the matter. [38665/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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As Minister for Finance it would not be appropriate for me to comment on the performance or financial position of an individual credit institution.

The Financial Regulator is responsible for the prudential supervision of credit institutions and is therefore best placed to access and analyse information regarding an institution's financial position. The Financial Regulator has advised the Minister that in light of the severe difficulties faced by credit institutions arising from the crisis of confidence in the global credit market, it will continue to intensify its on-site and off-site supervision of credit institutions. This will build on revised capital and liquidity measures introduced by the Regulatory Authority during 2006 and 2007. The Financial Regulator will focus on liquidity requirements, capital adequacy, risk management, balance sheet structure and corporate governance. This may involve setting additional regulatory ratios as appropriate in order to reduce the risk in the balance sheet, reflecting the current domestic and global conditions. To augment its own resources the Financial Regulator has engaged an accountancy firm to work intensively to examine the loan books of the six banks that are currently covered by the Credit Institutions (Financial Support) Scheme 2008 and report to the Financial Regulator as a matter of urgency. This examination will result in a detailed comprehensive analysis of the individual loans in the covered institutions.

I would also point out that the Scheme provides that covered institutions are required to submit reports to the Financial Regulator in relation to liquidity requirements, capital ratios, asset quality, risk exposure and funding costs. The Financial Regulator can request covered institutions to submit such reports as are considered necessary to monitor their compliance with the Scheme. The implementation of the Scheme is subject to close ongoing monitoring by the Governor of the Central Bank and the Chief Executive of the Financial Regulator.

There are also significant powers under the Scheme for the Financial Regulator, in consultation with me, to require action in relation to a covered institution's commercial conduct including setting targets on assets and liabilities and liquidity, solvency and capital ratios, and covered institutions must comply with such targets. A covered institution can be required to limit is exposure to any sector, customer or connected customer in the interests of financial stability or to take specific actions to restructure its activities in compliance with the Scheme.

I am satisfied that there is a comprehensive framework in place to ensure each of the covered institutions actively manages its financial position in accordance with the objectives of the Scheme.