Bernard Durkan (Kildare North, Fine Gael)
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Question 119: To ask the Minister for Finance when he expects the banking system to return to normal in the wake of recapitalisation; and if he will make a statement on the matter. [34118/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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On 30 March this year, in the context of the capital requirements imposed on the banks by the Financial Regulator and the transfer of eligible loans to NAMA at a discount, I made it clear that, insofar as any capital requirements could not be sourced privately, the Government would make up the shortfall.

In my comprehensive banking statement earlier today, I set out with clarity and certainty the final costs to the State of repairing the banking system. Though significant, the costs are fully manageable in the context of the programme of fiscal restraint to which the Government is committed.

The transparency and certainty to which we are committed have been recognised internationally as a significant strength of the government's strategy for the repair and the restoration of the banking system. The decisions we have taken will enable the banking system to play its essential role in providing the finance required to underpin our economic recovery and fiscal sustainability in the future.

Furthermore, we now have in place a more stringent regulatory system overseen by the Central Bank Governor, Professor Patrick Honohan and the new Financial Regulator, Matthew Elderfield. The new fully integrated structure replacing the Central Bank and Financial Services Authority of Ireland has been established by the Central Bank Reform Act 2010. With the commencement of the Act, the Central Bank will be responsible for maintaining the stability of the financial system, the effective regulation of financial institutions and markets and safeguarding the interests of consumers and investors.

Bernard Durkan (Kildare North, Fine Gael)
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Question 120: To ask the Minister for Finance if he has sought or is likely to seek a positive response from financial institutions receiving or likely to receive funding under the bank recapitalisation programme; and if he will make a statement on the matter. [34119/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I assume the Deputy is referring to the responses of the financial institutions to commitments in relation to small and medium enterprises (SME) lending following recapitalisation. The only recapitalised banks which are significant lenders to the SME sector are AIB and Bank of Ireland.

As you are aware, on foot of the bank recapitalisations previously announced, I imposed specific lending targets on the two main business banks, AIB and Bank of Ireland. They are making available for targeted lending not less than €3 billion each for new or increased credit facilities to SMEs in both 2010 and 2011. The two banks have each submitted SME lending plans both by geography and sector for 2010 and 2011 and these plans are being reviewed by my officials and Mr. John Trethowan, the Credit Reviewer.

A monitoring/reporting structure has been put in place which will ensure that banks continue to lend to the real economy and the Credit Review Office is operational. This ensures that there is a process in place to review decisions by the participating banks where credit facilities are refused, reduced or withdrawn.