Michael Creed (Cork North West, Fine Gael)
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Question 57: To ask the Minister for Finance the way he has arrived at the estimate of €10 billion further recapitalisation of Anglo Irish Bank; and if he expects this to fall due to be committed before the end of the guarantee; and if he will make a statement on the matter. [24719/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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As I pointed out in my Banking Statement on 30 March, the unavoidable reality is that the bank has incurred losses from its large-scale property lending and needs substantial further capital. I also made clear that unpalatable as it is, only the taxpayer can provide this capital and in view of the huge costs of an immediate liquidation or wind-down of the bank which I set out in my statement this was the least worst option in light of the imperative of continuing to maintain overall financial stability. I made clear that there is simply no alternative that meets the bank's unavoidable obligations at a lower cost consistent with the maintenance of the hard-won stability of the banking system in Ireland.

For that reason in addition to the promissory note provided to the bank at that time, to take account of the bank's losses to date, I confirmed that the bank will need further capital to cover future losses and accomplish the restructuring of the bank and its balance sheet and this was estimated at that time to be of the order of the figure referred to in the Deputy's question. In my statement I drew attention to the fact that notwithstanding very substantial work underway on the bank's restructuring Plan, there are still significant uncertainties about this figure including; the size of the discount on all of its loans transferring to NAMA, the scale of future losses on its loans that are not transferred to NAMA and the exact nature and the scope of any split of the bank under its plans and the EU Commission Decision on the plan.

I wish to advise the Deputy that the estimate provided at end-March remains the bank's base case estimate of the additional capital required, taking into account the further capital support provided at the end of May. The figure was included as part of the bank's restructuring plan submitted to the European Commission at the end of May. Work is continuing with the bank involving the NTMA, the Financial Regulator and my Department to refine this estimate in the context of ongoing discussions with the Commission on the restructuring plan. However, the uncertainties I referred to in my banking statement remain, in relation to for example the loan-by-loan assessment of the bank's loans transferred into NAMA.

I wish to reiterate that while the sums required to rescue the bank are enormous the costs of winding it down are even greater. The current bank strategy of seeking to devise a way to realise value for the taxpayer out of the remains of the old bank means the State could at least get some return, in time, recouping some of its assistance. I can again assure the House that the bank shares my overriding objective to maximise the potential return for the taxpayer in recognition of the State support.