Joan Burton (Dublin West, Labour)
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Question 53: To ask the Minister for Finance if he is in a position to provide certainty on the total bill for taxpayers for the recapitalisation of Anglo Irish Bank; and if he will make a statement on the matter. [34058/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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On the 8th of September last I announced the Government's decision on the restructuring and resolution of Anglo Irish Bank, which remains subject to European Commission approval.

This envisages the splitting of the bank into two licensed and regulated credit institutions: an Asset Recovery Bank focussed on recovering maximum value for the State from the loan assets and business of Anglo not being transferred to NAMA and a Funding Bank to fully safeguard Anglo's deposit base. It is important to note that this restructuring is not a cessation of business.

As I indicated in my Statement the Central Bank has completed his assessment of the capital required by the new structure. A statement has been issued by the Central Bank which details the capital required in a base case and in a stressed scenario and provides an explanation of the approach and methodology adopted to determine the bank's capital requirements.

The Central Bank has determined and advised the Bank that in the central - or expected loss case - an additional €6.4bn in total capital will be needed for the Recovery Bank and Funding Bank structure to continue to meet the minimum capital requirements in the coming years consistent with Basel rules.

A total of €22.9bn has already been provided by the State since the bank was nationalised early in 2009. This additional capital requirement brings the projected total gross cost of the restructuring of Anglo Irish Bank to €29.3bn.

This additional capital will be provided by increasing the Promissory Note issued by the State and by appropriate burden-sharing exclusively by holders of Anglo subordinated debt instruments as outlined in my Statement.

The Central Bank has also undertaken a stress test on Anglo building on the PCAR analysis carried out for the other banks earlier in the year. The Central Bank 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 could potentially be €5bn. higher than in the expected case of €29.3bn.

The stress case indicates the upper boundary of the level of losses. It does not represent the Central Bank's expectation of the likely outcome.

The Government will therefore capitalise the new structure to the expected case requirement of €29.3 billion.

It will be a priority for authorities to press ahead with the restructuring of the bank with a view to achieving the split of the bank early in 2011. I will continue close consultation with the European Commission and in particular with Commissioner Almunia with the aim of providing in the next month all elements necessary to bring the Commission's assessment of the restructuring plan to a positive conclusion. This should allow the matter to be settled through a formal Commission decision on a timely basis.