Written answers

Wednesday, 12 January 2011

Department of Finance

Banking Sector Regulation

2:30 pm

Photo of Liz McManusLiz McManus (Wicklow, Labour)
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Question 113: To ask the Minister for Finance if he will provide an update on the progress with the restructuring and consolidation of the Irish banking system; and if he will make a statement on the matter. [1375/11]

Photo of Billy TimminsBilly Timmins (Wicklow, Fine Gael)
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Question 114: To ask the Minister for Finance the progress made in drawing up plans, in agreement with the European Commission, the European Central Bank and the International Monetary Fund, for the future restructuring and viability of credit institutions here; and if he will make a statement on the matter. [1317/11]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 113 and 114 together.

The State's primary consideration in its involvement in the banking system is to protect, in the public interest, the financial and economic system of the State. Therefore, the Government's actions in the banking area are designed, while minimising the cost to the taxpayer, to support the development of a reformed and reinvigorated banking system that can serve our economy in a proper manner and, within which, there is scope for all viable credit institutions operating in the Irish market to play their full part.

The agreed joint EU-IMF Programme of Financial Support builds upon the banking measures taken to date and provides for further reform and reorganisation of the banking sector. The objective of the Programme, in so far as it relates to banking, is to fundamentally downsize and reorganise the sector so that it is proportionate to the size of the economy. It also envisages that the sector will be capitalised to the highest international standards and will also be in a position to return to normal market sources of funding. The Programme provides for a range of deleveraging measures, including appropriate actions to dispose of assets, as well as the enhanced re-capitalisation of certain banks. To this end, the Government provided further capital of €3.7 billion to Allied Irish Banks, €6.1 billion to Anglo Irish Bank, €2.7 billion to INBS and €525 million to EBS in December to ensure these institutions met their year end 2010 regulatory requirements of the Central Bank of Ireland. This was consistent with the objective of the joint IMF-EU programme to move Allied Irish Banks, Bank of Ireland, Irish Life and Permanent and EBS towards higher levels of capital and additional steps will be taken in the current year.

Further restructuring and viability plans for the relevant credit institutions will be submitted to the European Commission, including plans for the resolution of Anglo Irish Bank and Irish Nationwide Building Society in a manner that will fully protect their depositors, realise the maximum value from the two institutions' non-NAMA assets over time and minimise capital losses.

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