Written answers

Wednesday, 12 January 2011

Department of Finance

Banks Recapitalisation

2:30 pm

Photo of Arthur MorganArthur Morgan (Louth, Sinn Fein)
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Question 256: To ask the Minister for Finance the funding that has gone into the recapitalisation of each of the guaranteed institutions to date; the extent of funds provided to each financial institution on foot of the Credit Institutions (Stabilisation) Bill 2010; the full extent of future funds likely to be required by each institution; and if he will make a statement on the matter. [1000/11]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Minister, Department of Finance; Dublin West, Fianna Fail)
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The table sets out the amount of capital injected by the State into the Irish Banking System to date. The Central Bank has set out the further capital that will be required by AIB, BOI and EBS in order for them to meet a 12% core tier 1 ratio by the end of February 2011 as agreed in the Programme for Financial Support with the IMF, EU and the ECB.

Capitalisation of Credit Institutions
Credit InstitutionCost of Share AcquisitionCost of Preference SharesValue of Promissory Notes IssuedCapital Provided to 31 December 2010Additional CT1 required by Central Bank
€bn€bn€bn€bn
Anglo Irish Bank4-25.2829.280-
Allied Irish Banks3.73.5-7.2006.065
Bank of Ireland1.71.8-3.5002.199
Irish Nationwide Building Society0.1-5.35.400-
EBS Building Society0.625-0.250.8750.438
Total10.15.330.846.38.7
* Cash received on cancellation of Warrants

These Central Bank estimates take account of all elements of the banks' loan books, including the mortgage loan books. It has taken a realistic view of the likely losses to mortgage lenders. Indeed, the loss rates that have been used in both the base and stress case scenarios are in excess of the latest official figures released by the Central Bank. Furthermore, the detailed review undertaken by the external authorities of the financial status of the Irish banks and, in particular, of the Central Bank's PCAR exercise was an important part of the technical discussions underpinning the negotiated package of assistance with the IMF and our European partners. As part of the agreement with the EC, IMF and EU the State has agreed to adopt deleveraging measures and to implement restructuring of the banking sector. To this end, a Prudential Liquidity Assessment Review or "PLAR" will establish target funding ratios for each of the banks, identify non core assets and set an adjustment path to these targets based on specified non public annual benchmarks.

The completion of the Central Bank's PCAR/PLAR exercise will determine the requirement for any future capital support required by the banks.

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