Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Question 49: To ask the Minister for Finance if, in view of the fact that banks (details supplied) are effectively nationalised retail banks operating in financial markets here, his attention has been drawn to the details of the take over process undertaken by the British Government; his views on such an option for the Irish banks that he proposes recapitalising; and if he will make a statement on the matter. [6304/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Of the banks the deputy has listed in the UK, only one has been nationalised, the UK Government have taken significant shareholdings in the others. The Irish Government took the decisive and final step of nationalising Anglo Irish Bank because of concerns about governance issues and the market confidence in Anglo Irish Bank. In light of these concerns the Government felt that recapitalisation was no longer the appropriate and effective means to secure Anglo's continued viability. Anglo was taken into State ownership only as a final step to protect the banks position and the stability of the financial sector generally.

The Deputy is aware, I announced on 11 February the terms to be offered to Allied Irish Bank and Bank of Ireland. This followed from the earlier Government announcement of 21 December 2008. The recapitalisation package was recommended to me by the Governor of the Central Bank, the Financial Regulator, my financial advisors and the National Treasury Management Agency.

The Government has made it clear that the recapitalisation terms announced last week make provision for the Banks to repurchase the shares. The State will receive preference shares with a fixed dividend of 8% payable in cash or ordinary shares in lieu. The State will also get 25% of total ordinary voting rights in respect of change of control and board appointments. Furthermore, the recapitalised banks have reconfirmed their commitment to an extensive credit package which will help to increase lending capacity to small and medium enterprises by 10% and to provide an additional 30% capacity for lending to first time buyers in 2009. The credit package also provides for a €100m environmental and clean energy innovation fund to be established by each bank.

All the steps taken by the Government are to ensure that the public interest is secured so that the financial system in Ireland meets the everyday financial needs of individuals, businesses and the overall economy.