Joan Burton (Dublin West, Labour)
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Question 107: To ask the Minister for Finance his views on recent write-downs of impaired assets by EBS and National Irish Bank; if these write-downs are consistent with expectations as per the recent PricewaterhouseCoopers report; if it is expected that 2009 write-downs at Allied Irish Banks, Bank of Ireland and Anglo Irish Bank will be of a similar, greater or lesser magnitude, in proportionate rather than nominal terms; the way the write-downs of EBS and NIB compare to the stress-testing carried out by PWC on the loan books of the balance sheets at the institutions covered by the bank guarantee; if he will confirm that this stress-testing implied a 2% write-down of total loans outstanding per institution per annum for three years; if this is the worst case scenario according to the PWC report or if stress-testing had been carried out at a higher level of implied write-downs; and if he will make a statement on the matter. [6370/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Irish banking system comprises multiple and varied institutions, each of which has a balance sheet with differing degrees of exposure to particular asset classes. Any stress-test, whether by the institutions themselves or otherwise would have to take into account the type of assets on the balance sheet and the risk rating of those assets.

It is a matter for each institution's own Board to decide as to the level of provisions to set aside for future write downs and to deal with that in reporting on their financial accounts. Therefore, it would be inappropriate for me to comment on individual cases. I should however, point out that the PricewaterhouseCoopers report, commissioned by the Financial Regulator, does not cover National Irish Bank which is not a covered institution under the Guarantee Scheme.

All of the covered institutions have maintained capital ratios above the regulatory requirements of the Financial Regulator and Central Bank. Furthermore, the Deputy will be aware that the PWC report on the financial position of the six main covered institutions established that capital levels in the institutions in question would remain above regulatory minimums under various loan impairment stress-scenarios.

Nonetheless, the Government has decided on a comprehensive recapitalisation package for Bank of Ireland and Allied Irish Banks providing them with €3.5bn in core tier 1 capital each. This package will reinforce the stability of our financial system, increase the buffer available for impaired loans and facilitate the banks in lending into the economy. Covered institutions generally have significant reserves as well as substantial ongoing profits from their performing loans and other activities, which will act as the first buffer against impaired loans. The Government is also in discussion with other covered institutions (Irish Life & Permanent, EBS & INBS) concerning their respective positions.