Tommy Broughan (Dublin North East, Labour)
Link to this: Individually | In context

Question 72: To ask the Minister for Finance the impact of the recent bank deal on Exchequer spending for 2011 and 2012 onwards; and if he will make a statement on the matter. [7901/11]

Tommy Broughan (Dublin North East, Labour)
Link to this: Individually | In context

Question 73: To ask the Minister for Finance the impact of the Exchequer commitments to Anglo Irish Bank on each budget until 2016; and if he will make a statement on the matter. [7902/11]

Tommy Broughan (Dublin North East, Labour)
Link to this: Individually | In context

Question 74: To ask the Minister for Finance the impact of the Exchequer commitments to AIB on each budget until 2016; and if he will make a statement on the matter. [7903/11]

Tommy Broughan (Dublin North East, Labour)
Link to this: Individually | In context

Question 75: To ask the Minister for Finance the impact of the Exchequer commitments to Bank of Ireland on each budget until 2016; and if he will make a statement on the matter. [7904/11]

Tommy Broughan (Dublin North East, Labour)
Link to this: Individually | In context

Question 76: To ask the Minister for Finance the impact of the Exchequer commitments to Irish Life & Permanent on each budget until 2016; and if he will make a statement on the matter. [7905/11]

Tommy Broughan (Dublin North East, Labour)
Link to this: Individually | In context

Question 77: To ask the Minister for Finance the impact of the Exchequer commitments to Irish Nationwide on each budget until 2016; and if he will make a statement on the matter. [7906/11]

Tommy Broughan (Dublin North East, Labour)
Link to this: Individually | In context

Question 78: To ask the Minister for Finance the impact of the Exchequer commitments to EBS on each budget until 2016; and if he will make a statement on the matter. [7907/11]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

I propose to take Questions Nos. 72 to 78, inclusive, together.

In terms of the recent banking announcement, it is not possible to be definitive at this time about the impact on the Exchequer position. The Government will require burden sharing from subordinated bond holders, will require capital generating asset disposals by banks and the banks will also be encouraged, where possible, to generate private sector investment. This will help reduce the requirement for funding for the banks from the Exchequer and alleviate the burden on the domestic taxpayer.

My Department is currently in the process of revising its overall macroeconomic and fiscal forecasts, including Exchequer borrowing estimates, in light of emerging economic, fiscal and banking data. These revised forecasts will be presented in the Irish Stability Programme Update which is due to be submitted to the EU Commission by the end of April in line with the terms of the new EU Semester.

In terms of relevant background information, the position is as follows.

In 2010, €25.3 billion was committed to be provided to Anglo Irish Bank by way of Promissory Note. The terms of the Promissory Note provides, inter alia, that 10 per cent shall be paid to the Note holder each year. The first such payment, amounting to €2.53 billion, was made to the institution in March 2011 and similar payments will fall due for payment from the Exchequer each year up to and including 2016. Further payments will also arise beyond 2016 until the principal amount of the Anglo Promissory Note, including accrued interest, has been fully paid off.

In 2010, €5.3 billion was also committed to be provided to Irish Nationwide Building Society (INBS) by way of Promissory Note. Like the Anglo Note, the terms of the INBS Promissory Note also provides, inter alia, that 10 per cent shall be paid to the Note holder each year. The first such payment, amounting to €530 million, was made to the institution in March 2011 and similar payments will fall due for payment from the Exchequer each year up to and including 2016. Further payments will also arise beyond 2016 until the principal amount of the INBS Promissory Note, including accrued interest, has been fully paid off.

The combined payment to Anglo Irish Bank and INBS in March 2011 was €3.06 billion and this sum is provided for in the end-March Exchequer Statement under Note 6 "Non-Voted Capital Expenditure ".

In 2010, €250 million was also committed to be provided to Educational Building Society (EBS) by way of Promissory Note. Payment of the original principal sum will be made in equal annual instalments of €25 million, beginning in June 2011 and will continue beyond 2016 until the principal amount of the EBS Promissory Note, including accrued interest, has been fully paid off.

The non-voted capital expenditure estimates for 2011-2014 contained in Budget 2011 provide for these payments to Anglo Irish Bank, INBS and EBS in each of the years 2011-2014.

The requirement for additional capital for the banking sector, arising from the results of the PCAR/PLAR process, was announced on 31 March.

The results show that a further €24 billion is required by the banking sector to buttress their balance sheets. Allied Irish Banks (AIB) requires €13.3 billion, Bank of Ireland requires €5.2 billion, Irish Life & Permanent (IL&P) requires €4 billion and EBS €1.5 billion.

It should be noted that €5.3 billion of this €24 billion represents a buffer over and above what was required to meet the requirements of the stress test. Moreover €3 billion of this figure will represent contingent capital.

€10 billion of the €24 billion will be provided from the National Pensions Reserve Fund (NPRF) and thereby involves no impact on the Exchequer position. This was already included in the budgetary forecasts published in December 2010. All of the capital support provided to AIB and Bank of Ireland to date has been sourced from the NPRF.

Finally, as noted at the outset, the impact of the net additional capital support for the banking sector, over and above what had previously been factored in, is currently being assessed. If the full additional €14 billion had to be sourced by the Exchequer, this could require additional debt interest expenditure of the order of some €800 million per annum. This is a purely technical estimate and there are a number of factors which will determine the actual increase in debt interest expenditure. As I have already outlined, there are a number of mitigating factors which will help reduce the requirement for funding for the banks from the Exchequer and alleviate the burden on the domestic taxpayer.