Bernard Durkan (Kildare North, Fine Gael)
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Question 79: To ask the Minister for Finance the amount, extent and value of support offered, promised or given to each of the financial institutions arising from the guarantees; the conditions under which such support was offered; the degree to which the financial institutions have responded by way of service to customers; the extent to which future support is likely to be required by the same or other financial institutions; the eventual or likely cost to the State if known; if any other financial institutions or entities have indicated a financial support requirement; and if he will make a statement on the matter. [24791/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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As the Deputy is aware, since 29 September 2008, the State has guaranteed certain liabilities of credit institutions in Ireland initially under the Credit Institutions (Financial Support) Scheme (the 'CIFS' Scheme) but more recently under the Credit Institutions (Eligible Liabilities Guarantee) Scheme (the 'ELG' Scheme). Both Schemes set out extensive terms and conditions. The CIFS scheme applies comprehensive information and monitoring provisions to the credit institutions covered by the scheme and provides for enhanced coordination and reporting between the Central Bank, the Regulatory Authority and my Department so as to ensure the realisation of the Scheme's objectives. These provisions in turn apply to the ELG Scheme. Directions may also be issued in respect of commercial conduct and transparency under both schemes.

The ELG Scheme, which commenced on 9 December 2009 following Oireachtas and EU State aid approval introduced important changes to the Guarantee for financial institutions bringing it more into line with the mainstream approach to similar guarantees in other EU Member States. The Scheme is intended to facilitate the ability of credit institutions in Ireland to issue debt securities and take term deposits with a maturity post-September 2010 of up to five years, on either a guaranteed or unguaranteed basis.

The amount of liabilities guaranteed under the CIFS Scheme stands at €130bn in total at end March 2010 and the amount of liabilities guaranteed under the ELG Scheme stands at €139 in total at end March 2010. The amount of liabilities guaranteed for each individual institution is sensitive commercially for the institutions and I have therefore confined my reply to aggregate figures.

The State receives a fee from the institutions in return for the guarantees. The fee under the ELG Scheme is in line with the current ECB pricing recommendations on government guarantees for bank debt. The average fee for short-term bank debt now stands at 50 basis points under the ELG scheme. The fee structure for liabilities with a maturity of greater than one year is differentiated for institutions based on their credit ratings for liabilities.

The yield to the Exchequer in respect of guarantee fees as remuneration from the institutions for the availability of the State Guarantee is expected to amount to at least €1 billion over two years from September 2008. To date €718m in respect of the CIFS scheme and €90.5m in respect of the ELG scheme has been collected from the institutions.

The fees charged to guaranteed institutions have been approved by the European Commission and help ensure the compatibility of the guarantee schemes with EC state aid requirements.

I will continue to keep this most important area under review. The bank guarantee scheme includes strict terms and conditions on covered institutions to ensure that the public interest, which includes the general consumer and small business sector, is protected. By putting guarantees in place we have removed a major obstacle to financial institutions continuing to play their proper role in facilitating viable enterprises and individuals with credit where it is sought consistent with prudent and proportionate lending behaviour.

In terms of the continuation of financial support in the future in the form of the guarantee, I have said that I intend to make an announcement shortly on the future of guarantee when negotiations with the EU Commission are concluded on the end June review under state aid rules.