Jim O'Keeffe (Cork South West, Fine Gael)
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Question 96: To ask the Minister for Finance if he expects the 8% preference dividend of €280 million due by a bank (details supplied) in May 2010 will be paid or whether the issues raised by the European Commission will have been resolved in the meantime; and if he will make a statement on the matter. [11170/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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During 2009 the European Commission indicated that, in line with its policy on State Aid and pending its assessment of the named bank's restructuring plan, it should not make coupon payments on its tier 1 and tier 2 capital instruments unless under a binding legal obligation to do so. The bank agreed to this request by the Commission and resolved not to pay the non-cumulative distribution on a Sterling Security, which is guaranteed and which had been due to be paid on 14 December 2009. The effect of this decision by the bank was to trigger the 'Dividend Stopper' provisions of the securities, which precluded it for a period of one calendar year from and including 14 December 2009, from declaring and paying certain distributions or dividends including its ordinary shares and the Irish Government €3.5 billion preference shares.

The Bank would be precluded, should the 'Dividend Stopper' remain in force, from paying the dividend due on the preference shares on 13 May 2010. Under these circumstances, in accordance with the terms of the preference shares, the National Pension Reserve Fund Commission would become entitled to be issued with, at a date in the future, a number of ordinary shares related to the cash amount of the dividend that would otherwise have been payable. It is not for me to pre-empt the work of the European Commission. It is our preference to receive the dividend so if the prohibition is lifted before that date there is scope for a cash payment. If not, we will take ordinary shares in the bank.