Written answers

Tuesday, 3 November 2009

Department of Finance

Financial Institutions Support Scheme

8:00 pm

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
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Question 129: To ask the Minister for Finance the amount of money he expects to inject into Anglo Irish Bank over the 2009 to 2010 period; the number of tranches; if he expects the Exchequer to get any of this money back; and if he will make a statement on the matter. [37669/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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As per the Government announcement of 29 May last, €4 billion in capital has been provided to Anglo, in three tranches; €3 billion on 29 June, €827 million on 6 August following completion of the bank's debt buy back exercise, and the remainder, €173 million, on 25 September. This capital was provided to Anglo to protect the economy from the wider losses that would occur in the event of the failure of the bank, to protect the deposits in the bank and to prevent the bank becoming a systemic threat to the financial system.

As I stated in my speech on the Second Stage of the NAMA Bill in the Dáil on 16 September last, it is likely that some institutions will require additional capital in order to absorb the losses arising from the transfer of their impaired assets to NAMA and in order to maintain appropriate levels of capital. I made it clear that the Government would expect such an institution to explore all available options for raising such capital as it is the Government preference that private market solutions are found and implemented.

However, to the extent that sufficient capital cannot be raised independently or generated internally, the Government remains committed to providing such banks with an appropriate level of capital to continue to meet their requirements. This will be done in a manner consistent with EU State aid rules and the credit needs of the Irish economy. I have recently confirmed this position to the Financial Regulator in the case of Anglo to facilitate the FR in granting Anglo derogations from certain regulatory capital requirements.

The Board of Anglo is currently finalising a restructuring plan, which will consider all options for the future of the bank and set out the future strategy for Anglo. The restructuring plan will address the issue of compensatory measures for the capital provision. The restructuring plan will be submitted to the European Commission for approval under State aid rules by the end of November.

Photo of Willie PenroseWillie Penrose (Longford-Westmeath, Labour)
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Question 130: To ask the Minister for Finance his plans to put the revised and extended bank guarantee before Dáil Éireann for consideration; the reason he is extending the guarantee for existing subordinated debt; and if he will make a statement on the matter. [37674/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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As the Deputy is aware, on 16 September last I published an outline of the main elements of the proposed new guarantee scheme for longer term funding, called the draft Credit Institutions (Eligible Liabilities Guarantee) Scheme or ELG Scheme. The ELG scheme must be approved in accordance with EU State aid rules and discussions are continuing in this regard with the European Commission. The Scheme is also subject to approval by the Houses of the Oireachtas and I plan to bring the necessary legislative proposals before the Dail and the Seanad shortly.

The ELG Scheme is intended to facilitate the ability of credit institutions in Ireland to issue debt securities and take deposits with a maturity post-September 2010 of up to five years, on either a guaranteed or unguaranteed basis.

As I have previously remarked, the new scheme will be somewhat more targeted, and in this regard dated subordinated debt (Lower Tier 2) or asset covered securities (including other forms of covered bonds) issued by a covered institution on or after the commencement date shall not be guaranteed either under this Scheme or the CIFS Scheme .

However, dated subordinated debt and asset covered securities (including other forms of covered bonds) issued by a covered institution before the commencement date and which are covered liabilities shall continue to be guaranteed under the CIFS Scheme. Existing liabilities will remain guaranteed under the CIFS scheme until the maturity of the debt or the 29 September 2010, whichever is the earliest.

The ELG scheme will apply to new debt issued or deposits accepted by participating institutions in accordance with the terms of the ELG scheme.

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