Willie Penrose (Longford-Westmeath, Labour)
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Question 76: To ask the Minister for Finance the total amount, and the terms, of promissory notes transferred to date by the Government to Anglo Irish Bank and Irish Nationwide Building Society; the total amount for which he expects to issue promissory notes during 2010; the way these promissory notes affect the General Government Balance in 2010 and beyond; the date on which the first payments fall due; and if he will make a statement on the matter. [25611/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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To-date, I have issued Promissory Notes with a principal amount at €2.6 billion in the case of Irish Nationwide Building Society and €10.3 billion in the case of Anglo Irish Bank. The Notes are payable, on demand from the institutions concerned, at the rate of 10% of the principal amount per annum over a ten-year period commencing on March 31st, 2011, from the Central Fund.

An annual coupon, linked to Government bond yields, is payable to INBS and Anglo Irish Bank on the outstanding principal balance of the Promissory Notes. The coupon is payable in order to ensure that the principal amounts of the Promissory Notes can be recorded at "fair value" in the respective balance sheets of both institutions in line with accountancy requirements. At my discretion, the interest coupon can be paid each year from the Central Fund or, alternatively, deferred and rolled up into the principal amount. Any unpaid interest which is rolled up in this manner will fall due to the institutions concerned only after payment of the original principal amounts. The full repayment/redemption period of the Promissory Notes may, therefore, extend beyond ten years.

The timing and extent of the provision of further capital to Anglo Irish Bank remains under consideration. The question of issuing further capital to INBS has not arisen for consideration up to this point in time.

As a consequence of the issuing of the Promissory Notes, General Government Debt is increased by €12.9 billion in 2010. There will, however, be no actual Exchequer borrowing associated with these transactions for 2010 as the first payment will not arise until March 31st, 2011. The 2010 recapitalisation of these institutions should be seen in the context of the restructuring plans for both institutions. Pending agreement on these plans, it is appropriate not to include the Promissory Note amounts in the General Government Balance measure until the matter can be reviewed on foot of any decision made by the European Commission on these plans.