Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context

Question 198: To ask the Minister for Finance the full position in regard to projected or anticipated mergers, takeovers or other restructuring measures in the banking sector; and if he will make a statement on the matter. [18979/11]

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

The Deputy will be aware from my Statement on Banking on 31 March 2011 that the future of Ireland's banking landscape will be built around the two pillar banks, Bank of Ireland and AIB. Each of these banks has already begun to reorganise their operations into core and non-core functions and to implement a carefully managed programme of deleveraging. Both Bank of Ireland and AIB have submitted revised deleveraging plans for consideration by the Central Bank of Ireland. In my Statement on Banking, I said that the Irish banking system needs to be reduced to a size appropriate to our economy. Our banks will become smaller, more focused on core operations, better funded and better capitalised. In that context I announced that the operations of AIB and EBS would be combined to build a second pillar bank from the strengths of both institutions. The Deputy will be aware that I signed the acquisition agreement on 26 May 2011 and the acquisition was completed on 1 July 2011. The Deputy will be aware that the Memorandum of Understanding between the Irish Government and the EU-IMF requires that the legal merger procedure be completed not later than end September 2011.

In addition, also on 1 July 2011 the High Court granted a Transfer Order under the Credit Institutions (Stabilisation) Act 2010 to transfer with immediate effect the assets and liabilities of Irish Nationwide Building Society to Anglo Irish Bank Corporation Limited. The granting of the Transfer Order combined with the EU Commission's approval of the Joint Restructuring and Work Out Plan for Anglo Irish Bank and Irish Nationwide Building Society on 29 June 2011 are significant milestones in removing these banks from the Irish banking system. The removal of these banks from the system is a key element of the Government's restructuring of the Irish banking system. The purpose of the merger is to ensure a concentrated and vigorous work out of the existing loans.

Irish Life and Permanent is being radically restructured by selling its life insurance subsidiary and deleveraging its banking activities with a continuous assessment of sales opportunities in the market over time. A Direction Order was granted by the High Court on 9 June 2011, to allow ILP take the necessary steps to prepare its life insurance business for disposal by way of initial public offering or private sale. Irish Life and Permanent are required to submit their restructuring plan to the European Commission for approval by 31 July 2011.

A fundamental element of Government strategy has been to restore a functioning banking system and the Government has made particular commitments to recapitalising the banks and restructuring the banking sector as part of its programme for Government. This radical restructuring of the banking system is designed to put our banking system on a firm footing which is essential to Ireland's economic recovery.