Terence Flanagan (Dublin North East, Fine Gael)
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Question 75: To ask the Minister for Finance if he has drafted a scheme for the extension of the guarantee scheme beyond 2010; if the premium to be charged will differ from that under the existing guarantee; and his plans to present the scheme to the Houses of the Oireachtas. [27918/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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As I announced in my Supplementary Budget Statement on 7 April 2009, it is the Government's intention to put a State guarantee in place for the future issuance of debt securities with a maximum maturity of up to five years.

Following the enactment of the Financial Measures (Miscellaneous Provisions) Act at the end of June which provides a power to extend the guarantee by order beyond its current expiry date of 29 September 2010, work is continuing on the drafting of a Scheme, the introduction of which requires EU State aid approval.

Access to longer-term funding in line with the mainstream approach in the EU and is expected to contribute significantly to supporting the funding needs of the banks and to securing their continued stability. The extended scheme must be approved in accordance with EU State aid rules and discussions are continuing in this regard with the European Commission.

Jack Wall (Kildare South, Labour)
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Question 76: To ask the Minister for Finance his views on the recent International Monetary Fund forecast that losses in the banking sector here are expected to total €35 billion by end 2010 and that the Exchequer cost is expected to fall in the 12 to 15% range; and if he will make a statement on the matter. [27974/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The IMF has said that losses could be about €35 billion, or about 20 percent of GDP. It is, however, important to point out that the IMF figure was not based on a very detailed analysis of individual bank data. Also, this figure does not take into account the countervailing effect of bank earnings – in that sense it is a gross rather than a net figure.

The Deputy will be aware from my previous reports to the House that PWC has carried out detailed reviews of the loan books and the capital position of six of the covered institutions. Since then, additional due diligence reviews of Anglo Irish Bank, Allied Irish Banks and Bank of Ireland have been carried out, building on the assessments carried out by PWC.

As I have previously stated, I am not in a position to release information contained in these reviews, other than what has been released to date, because of the commercially sensitive nature of the information.

Arising from our assessment of the initial reviews of the loan books, the Government decided to establish the National Assets Management Agency to ensure that the financial institutions were freed up to allow them to lend to the real economy. As I announced in early April, the potential book value of loans that will be transferred to NAMA is in the region of €80 to €90 billion. However, the amount paid by NAMA will be considerably less than this since loans will only be transferred at an appropriate written down value. Where banks and borrowers have made losses, they will have to recognise such losses before the transfer of loans to NAMA. NAMA will operate on a full commercial basis and will be determined to recover monies owed to it to the fullest extent possible.

Bernard Durkan (Kildare North, Fine Gael)
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Question 78: To ask the Minister for Finance if he has carried out a sufficient audit of the banking sector with a view to identifying precisely the full extent of assets and lending; the degree to which this information, if available, is expected to impact on future corrective action within the banking sector and Government regulation; the steps he will take to address the cause in departures from good banking and lending practices over the past number of years; the further steps he will take to address these issues in the future; and if he will make a statement on the matter. [27866/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The PriceWaterhouseCoopers (PWC) Report commissioned by the Financial Regulator, provided a comprehensive analysis of the loan books of the covered institutions. This analysis informed the series of moves which have been taken to stabilise the Irish banking sector. The contents of the PWC reports are however, highly market sensitive and will not be published.

Work has begun at an international level on forging a new model to govern the conduct and behaviour of the financial sector. Ireland will play its part internationally and particularly at EU level in seeking to ensure that the re-design of the financial system and in particular of financial regulation is consistent with the objectives highlighted in the Guarantee Scheme.

The regulation of lending practices of Irish financial institutions is the responsibility of the Financial Regulator. In response to the financial turbulence of last year, the Financial Regulator instigated a series of new regulatory measures to take account of the changed environment, including an increased focus on the management of credit and liquidity risks of the banks. Among the actions the Financial Regulator has taken are the following: · the recruitment of 20 senior supervisory staff with banking experience to monitor developments in domestic credit institutions. An additional 20 positions were advertised in June 2009 for specific expertise across a range of areas. The competition closed in late June and the short listing of candidates from this competition is underway; and · enhanced reporting obligations in relation to capital, asset quality and individual large loans to supplement daily liquidity reporting requirements.

More recently however, I announced the Government's intention to establish a single fully integrated regulatory institution, the Central Bank of Ireland Commission. This new structure will replace the current board structure of the Central Bank and the Financial Services Regulatory Authority to achieve the highest performance standards for the new organisation.

The new Central Bank Commission will be chaired by the Governor of the Central Bank and will be responsible for both the supervision of individual firms and the stability of the financial system generally. This range of reforms will underpin a much more effective and efficient financial services regulatory system aligned with best international practice.

In the legislation which will underpin the new structures, the Government will seek to enhance the accountability of the new regulatory structures to the Oireachtas and to strengthen evaluation and quality assurance of regulatory performance.