Joan Burton (Dublin West, Labour)
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Question 57: To ask the Minister for Finance his views on recent reports (details supplied) that Anglo Irish Bank is exposed to significant derivative positions; if he will set out in detail the nature of any such exposures at Anglo Irish Bank, or any of the credit institutions participating in the eligible liabilities guarantee, including a breakdown by product type, category of counter parties and if the positions are hedging or trading positions; the nature and extent of any guarantees sought or granted in the context of such derivative exposures; and if he will make a statement on the matter. [45896/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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A guarantee has been provided for the Off-Balance Sheet (OBS)/ derivative exposures of Anglo Irish Bank. This includes foreign exchange instruments, interest rate instruments and other hedging arrangements. Anglo is the only institution that has availed of such a guarantee. As with all banks, Anglo Irish Bank is exposed to a number of risks and uncertainties in the normal course of its business activities. These risks include market risk (arising from Anglo's exposures to interest rate and currency movements). Derivatives are used by Anglo Irish Bank solely for the management of these risks and are not entered into for any speculative purposes. The bank's balance sheet exposure to these risks taken together with the risk mitigation provided by these derivatives are managed within risk limits which are approved by the bank's board of directors.

Anglo Irish Bank had recently indicated to the authorities that owing to the bank's financial situation and recent ratings actions their derivative counter parties required the provision of such a guarantee for such transactions with the bank. The ELG does not cover such liabilities.

The situation was reviewed by the NTMA who, based on the bank's concerns, recommended to me that the guarantee should be put in place given the financial issues the bank was currently experiencing. The Governor of the Central Bank was also consulted and the Central Bank confirmed it was agreeable to such a guarantee to help manage Anglo's balance sheet risks.

Under the terms of the guarantee package, Anglo management must continue to manage these derivative positions within pre-approved risk limits approved by the bank's board of directors.

It was concluded that it was important to avoid exposure to serious operational risks in the bank which could potentially arise without the continued support of the counter parties.

Joan Burton (Dublin West, Labour)
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Question 58: To ask the Minister for Finance the total amount of senior and subordinated debt guaranteed under bank guarantee scheme on 30 September 2008, broken down by credit institution; the total amount of guaranteed senior and subordinated debt which matured and was redeemed under the terms of the original bank guarantee; the total amount of senior and subordinated debt issued to date in 2010 under the eligible liabilities guarantee; the total amount of senior and subordinated debt issued to date under the eligible liabilities guarantee which has matured and been redeemed; the total amount of senior and subordinated debt issued to date under the eligible liabilities guarantee which remains outstanding; the total amount of senior and subordinated debt issued before 30 September 2010; if he will provide a breakdown per institution in each case; and if he will make a statement on the matter. [45909/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Information provided by the covered institutions in respect of covered liabilities guaranteed under CIFS related to senior unsecured debt in aggregate, a category that comprised medium-term notes and other senior debt such as commercial paper and certificates of deposits. The total amount of senior unsecured debt as at 30 September 2008 was in the region of €124 billion. A further €12 billion of dated subordinated debt was also guaranteed under CIFS at that date. Senior bonds and subordinated bonds to the value of €68.8 billion and €1.4 billion, respectively, matured and were redeemed at face value between 30 September 2008 and 29 September 2010. As is normal practice when bonds mature they are repaid, in this instance all were senior bonds and all were Government Guaranteed. Furthermore, under Irish law senior debt obligations rank equally with deposits and other creditors. I would like to remind the Deputy that subordinated debt is not an eligible liability under the terms of the ELG Scheme, and therefore no subordinated debt has been issued to date under that Scheme. Senior medium term notes amounting to €25 billion have been issued under the ELG scheme to-date – further detail on this number is disclosed on the NTMA website – www.ntma.ie. None of the medium term notes issued under the scheme have matured to-date. Much of the short- term senior debt issued under the ELG Scheme (i.e. commercial paper (CP) and certificates of deposit (CD)) will have, due to its nature, rolled over frequently, and it would not be either practical or meaningful to quantify amounts that have matured. Further detail on all CP and CD programmes certified under the ELG Scheme is also disclosed on the NTMA website – www.ntma.ie . Finally, owing to commercial sensitivities, my Department does not publish details of unguaranteed debt issued by participating institutions, and does not publish covered liabilities by institution.