Written answers

Tuesday, 24 January 2012

9:00 pm

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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Question 168: To ask the Minister for Finance the losses imposed on subordinated bondholders in covered institutions in each of the past four years; and if he will make a statement on the matter. [4103/12]

Photo of Michael NoonanMichael Noonan (Minister, Department of Finance; Limerick City, Fine Gael)
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In aggregate, the covered Irish banks have generated €15.5bn of capital from Liability Management Exercises (LMEs) over the last four years. The breakdown per year is as follows:

€bn2008200920102011Total
PTSB---1.01.0
BoI-1.01.31.53.8
AIB-1.10.43.65.1
EBS-0.00.10.20.3
INBS0.00.1-0.10.3
Anglo-1.81.6-3.3
Total cash gains from Sub-debt burden sharing0.04.03.46.513.9
*BoI - Debt for Equity transactions0.30.40.7
BoI - Residential Mortgage Backed Securitization LMEs0.30.3
Anglo - Unrealised Tier 1 gain0.30.3
Other0.20.10.10.35
Total gains from LMEs0.24.43.87.215.5

*In the case of Bank of Ireland (BoI) subordinated bondholders received €0.7bn of ordinary equity shares in consideration for their bond holdings (debt for equity transactions), as part of its recapitalisation in 2010 and 2011. In addition, BoI generated €0.3bn of capital in December 2011 from the re-purchase of c. €1.2bn residential mortgage backed securitizations.

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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Question 169: To ask the Minister for Finance if, in view of the progress made to date in respect of reaching the deleveraging target set for AIB, Bank of Ireland and Irish Life and Permanent, an extension to the timetable would ease the pressure on credit availability to consumers and business providing assistance to the domestic economy; and if he will make a statement on the matter. [4104/12]

Photo of Michael NoonanMichael Noonan (Minister, Department of Finance; Limerick City, Fine Gael)
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As the Deputy will be aware the covered banks are required to deleverage circa €70bn of assets by 31 December 2013. To date significant progress has been made in that regard: The two pillar banks met the 2011 deleveraging targets with almost €15 billion of these assets sold at significantly better pricing than anticipated in the PCAR/PLAR 2011 exercise. Total deleveraging achieved across government supported banks was €40.5 billion through end November 2011 against full year 2011 expected deleveraging of €34.7 billion. In addition, Irish banks enjoyed deposit inflows in the final quarter of 2011 despite the very difficult international environment.

It is important to maintain the progress in downsizing our banking system which was made in 2011, and we are working to refine the deleveraging framework to minimize risks to lending to the economy and discourage excessive competition for deposits. Nonetheless, it is also important, as part of the overall strategy to maintain progress in regard to deleveraging and this momentum will ensure that banks will better able to support the real economy in the shortest possible timeframe.

As things stand the banking system restructuring plan creates capacity for the two Pillar Banks, Bank of Ireland and AIB, to provide lending in excess of €30 billion in the next three years. SME and new mortgage lending for these banks is expected to be in the range of €16-20bn over this period. The Government has imposed lending targets on the two domestic pillar banks for the three calendar years, 2011 to 2013. Both banks were required to sanction lending of at least €3 billion in 2011, €3.5 billion this year and €4 billion in 2013 for new or increased credit facilities to SMEs. The position will be monitored on an on-going basis and any adjustments required will be considered and addressed.

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