Written answers

Wednesday, 13 May 2009

Department of Finance

Financial Institutions Support Scheme

9:00 pm

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
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Question 94: To ask the Minister for Finance if he will extend the bank guarantee beyond September 2010 in its current form; if the establishment of the national asset management agency is intended to allow the cessation of the bank guarantee in its current form at end September 2010; if he envisages the continuation of the bank guarantee beyond September 2010 in an amended form; and if he will make a statement on the matter. [18971/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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As the Deputy will be aware, in my Supplementary Budget speech on 7 April I announced that the Government intends to put a guarantee in place for the future issuance of debt securities with a maturity of up to five years.

Work is currently underway to deliver this commitment which is subject to State aid approval from the European Commission. An amendment to the Credit Institutions Financial Support Act, 2008 will be required which it is intended to introduce in the course of the current Oireachtas session.

As I stated on 7 April last, access to longer-term funding in line with the mainstream approach in the EU will contribute significantly to supporting the funding needs of the banks and to securing their continued stability.

Alongside the proposed restructuring of the guarantee, the establishment of the National Asset Management Agency (NAMA) is a very significant important measure to continue to safeguard the stability the banking system and ensure the supply of credit to the real economy. As I highlighted in my recent Budget Statement cleansing and repairing the banks' balance sheets is considered fundamental to achieving a sustained recovery of the banking system in Ireland. The NAMA initiative is integral to addressing the issue of asset quality in the banking system in Ireland. It, therefore has a very important role to play complementing that of the guarantee.

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