Joe McHugh (Donegal North East, Fine Gael)
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Question 151: To ask the Minister for Finance the fees that were attached to the credit guarantee scheme introduced in September 2008; the measures that were put in place to ensure banks were not and are not paying bonuses or dividends at the expense of taxpayers and at the expense of repaying taxpayers; the measures being used to ensure that the taxpayer is adequately compensated for the support provided; and if he will make a statement on the matter. [9615/11]

Michael Noonan (Limerick City, Fine Gael)
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The Credit Institutions (Financial Support) Scheme 2008 (CIFS) provided that each covered institution pay a charge to the Exchequer for its guarantee. The sum of €760,467,567 was paid into the Exchequer on 28 October 2010 in respect of all fees and interest accumulated under the Credit Institutions (Financial Support) Scheme which terminated on 29 September 2010. Including payments received under the Eligible Liabilities Guarantee Scheme (ELG), over €1.3 billion has been transferred to the Exchequer as at October 2010 as a consequence of the support provided by the State and taxpayer. A further sum of over €591,000,000 has been received in fees under ELG from the participating institutions since 28 October 2010. Fees for the CIFS were originally calculated to compensate the State for the cost of the Guarantee. Fees for ELG, which are higher, were calculated on a basis that included market ratings of risk. The Deputy will be aware that since the introduction of the Guarantee in September 2008 there have been a number of Government backed initiatives which impact on the operational environment and place specific restrictions and limitations on the covered institutions in relation to the payment of dividends, and also the payment of bonuses to their senior management and staff. I refer to the publication of the CIROC Report in March 2009 and the subscription agreements for the recapitalization of Bank of Ireland and AIB, and the nationalisation of Anglo Irish Bank, and the later capital injections by Government in support of the EBS Building Society and Irish Nationwide Building Society. An important feature of the Credit Institutions (Stabilisation) Act 2010 is the provision which will stem the payment of bonuses for those banks receiving State support by way of capital investment by the Government. Paragraph 48 of the CIFS provided that a covered institution shall comply with rules governing the declaration and payment of dividends made by the Minister after consultation with the Governor and the Regulatory Authority.

The Deputy is no doubt also alluding to the termination payment to the former CEO of AIB in his question. I am extremely unhappy about this payment to the former Chief Executive. My officials are in ongoing correspondence with the bank about the payment investigating the circumstances of this payment including whether the bank was contractually obliged to make the payment or whether it could have been avoided. The investigation will also ascertain at what level the package was approved and whether any further action should be taken in relation to the issue. This is a complicated legal situation and I do not want to say more about it at this stage. I hold the view that as much information as possible on this type of issue should be made available to the public and will ensure that this happens at the appropriate time. I think it is important to point out however a key element of the Credit Institutions (Stabilisation) Act 2010 is that it allows me as Minister for Finance to impose conditions when providing State support to an institution. This provision has been used to prohibit the payment of performance related bonuses at AIB in December 2010.