Kieran O'Donnell (Limerick East, Fine Gael)
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Question 142: To ask the Minister for Finance his projection of the final cost to the taxpayer in respect of the Anglo Irish bank bailout; when he will be making this announcement; and if he will make a statement on the matter. [34308/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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As indicated in my statement of the 8th September the Government believes that it is essential to identify, with as much certainty as possible, the final cost for the restructuring and resolution of the bank. This will underpin international financial confidence in Ireland. Accordingly, the Central Bank/Financial Regulator was asked to determine the appropriate levels of capital needed in both institutions by October.

This assessment has now been completed. The Financial Regulator has determined that in the central - or expected loss case - an additional €6.4bn. in total capital will be required for the Recovery Bank and Funding Bank structure to continue to meet minimum capital requirements in the coming years consistent with Basel 2 rules. As the House will be aware a total of €22.9bn has already been provided by the State to support Anglo Irish Bank since the bank was nationalised early in 2009. This additional capital requirement brings the projected total cost of the restructuring of Anglo Irish Bank to €29.3bn.

Because of the recent volatility in the markets and the need to bring as much certainty to the situation I asked the Financial Regulator to undertake a stress test on Anglo building on the PCAR analysis carried out for the other banks earlier in the year. The Financial Regulator has determined that on the basis of severe stress assumptions - including a 70% discount on the remainder of Anglo's NAMA loans– the stress case level of losses in Anglo Irish Bank are €5bn. higher than in the base case of €29.3bn.

In order to safeguard the financial interests of the State it is vital for all to understand fully and present accurately and in a balanced way the fundamental difference between these two figures I have announced this evening.

The Financial Regulator's determination of the base case capital requirement for Anglo is €29.3bn. This is the Financial Regulator's best estimate of the capital required to meet those losses expected to arise from the remaining NAMA transfers and on the those loans not transferring in the years ahead.

The stress case estimate does not represent the Financial Regulator's expectation of the most likely outcome – it delimits the boundary of the level of losses that could arise if the bank were to experience unexpected additional losses in certain severe stressed scenarios.

The Government will ensure that the new structure for Anglo is capitalised to an appropriate level to maintain its stability throughout the restructuring process taking into account both the Financial Regulator's base and stress case and the contribution that could be made by further burden sharing exclusively by holders of subordinated debt in the bank.

The revised plan will be completed over the next two weeks in finalising the bank's revised restructuring to be submitted to the European Commission. It will also be a priority for authorities to press ahead rapidly with the restructuring of the bank with a view to achieving the split of the bank early in 2011. I am confident following further consultations with the European Commission that Commissioner Almunia will be in a position to indicate his agreement in principle to the proposed restructuring next month. This should allow the matter to be settled through a formal Commission Decision on a timely basis.

It is important to point out that this restructuring is not a winding down of the bank. The revised structure requires the Asset Recovery bank to focus on working out the assets of the bank over time.