Written answers

Wednesday, 28 April 2010

Department of Finance

Banks Recapitalisation

Photo of Bernard AllenBernard Allen (Cork North Central, Fine Gael)
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Question 81: To ask the Minister for Finance if he will arrange to present full details of the worked costings of keeping Anglo Irish Bank as a going concern, compared to an orderly wind down of that bank. [17120/10]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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I have no plans to present full details of the worked costings of the options regarding the future of Anglo Irish Bank at this time. As the Deputy is aware Anglo is currently updating its Restructuring Plan to take account of EU Commission's feedback on the initial plan submitted by the bank on 30 November last. The plan will examine all options for the bank's future including: immediate liquidation, wind-down over a longer period of time, a split between a good bank and an asset management company, and maintaining the bank in its current form as a going concern. The revised plan is to be submitted to the EU Commission by the end of May 2010.

Significant further work remains to be done by the bank and its advisers on the updated Restructuring Plan to test and verify the assumptions in each scenario for the future of the bank. The Deputy will appreciate that at this critical juncture in the process and having regard to the commercial sensitivity of the information and the need to ensure proper protocols are observed in dealing with the EU Commission it is not appropriate for me to publish the details of the plan which is still a draft. The EU Commission in publishing its decision will include all information pertinent to the decision, subject only to an objective assessment on the commercial sensitivity and confidentiality of the information.

I can assure the Deputy that my main concern is to ensure that in any plan the interests of the taxpayer are paramount and that my preferred approach to the options presented in the plan will be consistent with that concern. Any plan submitted by the bank will be reviewed by me and my advisors and I will take advice also from the Central Bank, the Financial Regulator and the NTMA.

Photo of Ruairi QuinnRuairi Quinn (Dublin South East, Labour)
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Question 82: To ask the Minister for Finance if he expects the coupon payable in 2010 on the preference shares acquired by the National Pensions Reserve Fund in a bank (details supplied) to be paid in cash or through the issue of ordinary shares; and if he will make a statement on the matter. [17215/10]

Photo of Brian Lenihan JnrBrian 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 Pensions 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.

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