Enda Kenny (Mayo, Fine Gael)
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Question 141: To ask the Minister for Finance the extent of moneys paid by the banks for the deposit guarantee scheme to date; if he will confirm that this money is ring fenced; the purpose for which it is intended; if he will consider using an element of this fund for the purposes of introducing a loan guarantee scheme; and if he will make a statement on the matter. [21824/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The legal basis for the Deposit Guarantee Scheme in Ireland is set out in the European Communities (Deposit Guarantee Scheme) Regulations 1995 (S.I. No. 168 of 1995) as amended. These Regulations implement the European Union Directive on Deposit Guarantee Schemes (94/19/EC) as amended. The Deputy will be aware that the Irish Deposit Guarantee Scheme covers 100% of retail deposits with all credit institutions authorised in Ireland (including credit unions) up to a maximum of €100,000 per qualifying depositor per institution and that the Scheme is administered by the Central Bank and Financial Services Authority of Ireland (CBFSAI).

The level of contribution required from each credit institution is 0.2% of eligible deposits held at all branches of the credit institution in the EEA, including deposits on current accounts and share accounts with a building society, but excluding interbank deposits and deposits represented by negotiable certificates of deposit. While deposits held in credit unions are already covered to the extent set out above, I intend to make regulations to provide for a contribution amount specific to credit unions, in accordance with Section 4(2)(a) of the Financial Services (Deposit Guarantee Scheme) Act 2009.

Each contribution by a credit institution is maintained in a Deposit Protection Account at the CBFSAI. The total amount currently held in Deposit Protection Accounts is approximately €603.5 million. This amount is for use only in relation to the administration of the Deposit Protection Account, including any possible pay-out in the event of an insolvency of a credit institution, as required by the legislation. In that context, I do not propose using an element of this fund for the purposes of introducing a loan guarantee scheme as suggested by the Deputy.

The Deputy may also be aware that work is underway within the Department of Enterprise, Trade and Employment on the examination of a possible scheme of loan guarantees and my officials have held a number of discussions with officials of that Department on the subject. Key concerns being addressed include the extent to which such a scheme would increase lending to SMEs (as against enhancing security for the banks) and the extent of taxpayer exposure and I understand that the work is nearing completion.