Pat Rabbitte (Dublin South West, Labour)
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Question 53: To ask the Minister for Finance the changes to the payment rates for the eligible liabilities guarantee and credit institution financial support bank guarantee schemes which have taken place over the past year or are envisaged; his views on new directions from the EU as to the minimum level of such guarantee fees; the way these changes are likely to impact on the public finances; the guarantee income envisaged from these guarantee schemes for 2010, 2011 and 2012; and if he will make a statement on the matter. [25637/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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As the Deputy may be aware, at the time the Credit Institutions Financial Support (CIFS) Scheme was put in place, I highlighted the intention that guarantee fees of at least €1 billion would be raised in respect of the two year period of the guarantee. In the context of the six month review of the charge under the CIFS Scheme, which was undertaken by my Department in September 2009, and given the shortfall in monies raised from the charge to that date, the charge factor levied on each institution was reviewed and new, higher rates were applied over the remainder of the Scheme. It remains my intention that €1bn will be raised under CIFS and ELG by end September 2010 and it is expected that this target will be reached.

I introduced a revised guarantee scheme, the ELG Scheme, in December 2009. Any new debt issued or new deposits taken after the date that participating institutions joined that scheme are guaranteed under ELG. The formula for calculating the guarantee fees paid under ELG is based on European Central Bank recommendations on government guarantees for bank debt dated 20 October 2008, available at http://www.ecb.int/pub/pdf/other/recommendations_on_guaranteesen.pdf . In line with the ECB recommendations above, the fee structure is differentiated for institutions based on their credit ratings for liabilities with a maturity of greater than one year. A flat rate fee of 50bp applies to all liabilities of less than or equal to one year.

On the future arrangements for fees, the European Commission last month published a staff working document on the application of State Aid rules on Government Guarantee Schemes covering bank debt to be issued after 30 June 2010. The pricing structure outlined in the document is being taken into account in ongoing discussions between the Department and the European Commission on the prolongation of the ELG Scheme which are expected to be concluded shortly. This will be dependent on the exact phasing of the exit strategy for the guarantee. It is not possible to make any assessment of the level of possible guarantee fees that may be collected for 2011 and 2012 as this will depend on the availability and scope of any guarantees and the level of guarantee fees approved under EU State aid rules.