Written answers

Wednesday, 28 April 2010

Department of Finance

Financial Institutions Support Scheme

Photo of Willie PenroseWillie Penrose (Longford-Westmeath, Labour)
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Question 109: To ask the Minister for Finance the progress made to date with respect to the viability and business plans for the credit institutions covered by the bank guarantee submitted to the EU Commission for consideration; when he expects opinions to be issued by the Commission in relation to each of the credit institutions concerned; and if he will make a statement on the matter. [17199/10]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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Under EU state aid requirements the financial institutions which were recapitalised by the State, Allied Irish Banks, Anglo Irish Bank and Bank of Ireland, were obliged to submit restructuring plans to the European Commission within six-months of receiving Government assistance. The Bank of Ireland Plan was submitted to the Commission on 30 September 2009, the Allied Irish Banks Plan was submitted on 13 November 2009, and the Anglo Irish Bank Plan was submitted on 30 November 2009.

Considerable discussion, dialogue and exchange of information is continuing in respect of the restructuring plans that have already been submitted as the Commission undertake their assessment of the plans in line with the applicable state aid rules. Negotiations in respect of the Bank of Ireland plan are at an advanced stage, and a decision is expected from the European Commission by mid-2010. AIB is adjusting the content of its plan to reflect the new capital requirements announced by the Financial Regulator in March, while Anglo Irish Bank has been asked by the Commission to submit a revised plan by 31 May 2010 accounting for the additional State aid of €8.3 billion which was approved by the Commission on 31 March 2010. It is too early to speculate on when final approval of the restructuring plans for these institutions will be granted by the Commission.

The Deputy may also wish to note that, as I indicated in my Banking statement of 30 March 2010, two further financial institutions - EBS due to its participation in NAMA and INBS because of the recapitalisation measure of €2.7 billion announced in March - must also submit restructuring plans to the Commission in June.

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
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Question 110: To ask the Minister for Finance the State's exit strategy from the blanket bank guarantee issued on 30 September 2008; the credit institutions that have issued debt or other liabilities under the extended eligible liabilities guarantee; the amount of liabilities that have been raised to date under the eligible liabilities guarantee, and the maturities; and if he will make a statement on the matter. [17230/10]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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In the statement on the banks which I made on 30 March 2010 I announced that I will be seeking the Commission's agreement for a modified extension of the guarantee consistent with a phasing out over a realistic period of time. In line with the State aid approval granted by the European Commission on 20 November 2009 in respect of the Eligible Liabilities Guarantee Scheme, the Commission is due to undertake its six-monthly review of the Scheme on 1 June next.

The timing and exact steps in the phasing out of the guarantee will be dependent on a range of factors, most notably the situation in global financial markets, the funding capacity available to Irish institutions, evolving EU policy on exit strategies for State support to the banking sector generally and from guarantees in particular, and financial stability risks to the Irish banking sector. Following the conclusion of the review process with the Commission I intend to make a firm announcement about the future of the guarantee having regard to all of these important issues.

All of the participating institutions, that is Allied Irish Banks, Anglo Irish Bank, Bank of Ireland, EBS, Irish Life and Permanent and Irish Nationwide Building Society, have issued debt or other liabilities under the eligible liabilities guarantee (ELG) scheme. The total amount guaranteed under ELG scheme at 31 March 2010 was €140bn. Of this amount, guaranteed deposits amounted to €108bn. The NTMA provide a comprehensive list on their website of securities which are guaranteed under ELG.

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