Tuesday, 19 July 2011
Department of Finance
Bank Guarantee Scheme
I understand that the Deputy is referring to the repayments so far this year of unguaranteed unsecured senior bond holders in Anglo Irish Bank. I am advised by the bank that €1.06 billion of unsecured unguaranteed senior debt in Anglo Irish Bank has matured and been repaid so far this year.
I have indicated to the House that, consistent with Government policy, I will raise the issue of burden sharing which will allow for the imposition of losses on unguaranteed and unsecured senior bondholders in Anglo and INBS with the IMF and EU authorities in the autumn. I have also indicated that we will take no unilateral action in this area.
Though no capital injections have been made in respect of any of the covered institutions to date in 2011, it has already been announced as part of the PCAR 2011 results on 31 March that further recapitalisation measures will be required to enable the AIB/EBS, Bank of Ireland and IL&P to meet their regulatory capital requirements set by the Central Bank. The State has committed to completing the recapitalisations to the extent possible by 31 July as part of the Programme of Financial Support for Ireland.
The total recapitalisation commitments made or to be made in respect of the banks are set out in the following table.
|Recapitalisation of Credit Institutions|
|Credit Institution||Cost of Share Acquisition||Cost of Preference Shares||Capital contributions||Capital Provided to 31 December 2010||PCAR 2011 requirement||Contingent Capital||Mar 31st Total(1)|
|Anglo Irish Bank||4.0||-||25.3||29.3||-||-||0.0|
|Allied Irish Banks||3.7||3.5||-||7.2||11.9||1.4||13.3|
|Bank of Ireland||1.7||1.8 (2)||-||3.5||4.2||1.0||5.2|
|Irish Nationwide Building Society||0.1||-||5.3||5.4||-||-||0.0|
|EBS Building Society||0.6||-||0.3||0.9||1.3||0.2||1.5|
|Irish Life and Permanent||-||-||-||-||3.6||0.4||4.0|
|(1) Before banks potential capital raising actions (LME's/Asset Sales / Internally Generated Capital)(2) Original investment of €3.5bn, of this €1.7bn converted to equity in May 2010|
The Government is committed to ensuring that the banks meet the PCAR target, but is also seeking further direct contributions to the capital requirements of the banking system. As such, the Government has instigated processes which have reduced and will further reduce the cost to the State by looking for significant contributions from subordinated debt holders, by the sale of assets to generate capital and, where possible, by seeking private sector investors. It is expected that the effect of these actions will be to reduce the amount of capital required by the State very significantly.