Pearse Doherty (Donegal South West, Sinn Fein)
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Question 74: To ask the Minister for Finance if the €3.7 billion put into AIB in December 2010 made up part of the National Pension Reserve Fund contribution to the EU-International Monetary Fund programme; if he will confirm whether the NPRF contribution to the €85 billion EU-IMF programme is €10 billion; and if he will make a statement on the matter. [3040/11]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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1The Government announced on 28 November 2010 that it had agreed in principle to a total package of €85 billion designed to support the finances of this country, made up of loans from the European Financial Stability Fund and the European Financial Stability Mechanism backed by the Member States of the European Union, bilateral loans from the UK, Sweden and Denmark and loans from the International Monetary Fund's Extended Fund Facility on the basis of specified conditions, and including a contribution from our own resources.

The external lending being made available amounts to €671⁄2 billion and will be drawn down as required over the three-year period of the Programme. The State's contribution to the Programme will be €171⁄2 billion, which will come from the National Pensions Reserve Fund (NPRF) and other domestic cash resources. It is envisaged that the moneys to be sourced from the NPRF will be used primarily to support the banking system. The precise application of the funds available under the Programme will be a matter for decision in the light of the evolving budgetary situation, Exchequer access to funding on the financial markets and the needs of the banking system.

On 23 December 2010 I directed the NPRF Commission to invest €3.7 billion in cash in AIB in consideration of the issuance of 675 million ordinary shares and 10.5 billion convertible non-voting shares ("CNV shares"), the cancellation of warrants held by the NPRF and the payment by AIB to the NPRF of certain fees. The CNV shares were issued in order to facilitate the ongoing disposal of AIB's Polish interests. The NPRF intends to increase its holding in AIB's ordinary shares by converting the CNV shares into ordinary shares following completion of the disposal of its Polish assets. The NPRF currently holds 49.9 per cent of the ordinary share capital of AIB and approximately 92.8 per cent of the total issued share capital of AIB.

I gave these directions to ensure AIB met its year-end capital requirement as set by the Central Bank. The capital injection of €3.7bn from the NPRF forms part of AIB's revised capital requirement of €9.8bn which must be raised by the end of February 2011. The remaining €6.1bn capital requirement is expected to be met through a combination of fresh capital from the State, the execution of a liability management exercise in relation to existing subordinated debt holders and other capital generative measures ongoing by the bank. This capital is essential to allow AIB to fulfil its role in supporting the Irish economy. The Government's provision of support to AIB is in accordance with the Joint EU-IMF Programme.

At 31 December 2010 the total value of the National Pensions Reserve Fund NPRF was €24.4 billion. This figure comprised €9.5 billion in the Directed Portfolio (the value of investments in Bank of Ireland and Allied Irish Banks held on the direction of the Minister for Finance) and €14.9 billion in the Discretionary Portfolio (the balance of the Fund excluding directed investments).