Jonathan O'Brien (Cork North Central, Sinn Fein)
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Question 49: To ask the Minister for Finance with respect to the revised memorandum of understanding of 10 February 2012, his plans to ensure the recapitalisation of a company (details supplied); the cost of this recapitalisation to the State; if the recapitalisation plan will be affected by a failure to complete the sale of the company; and if he will make a statement on the matter. [9970/12]

Michael Noonan (Limerick City, Fine Gael)
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As a result of the March 2011 PCAR the company was required to raise additional capital of €4 billion. In July 2011 €2.3 billion of this requirement was injected by way of a placing of shares to the Minister for Finance, leaving the Minister with his current holding of 99.24%. At this time a further €400 million was also injected into the company in return for a Contingent Capital note bringing the total State contribution to €2.7 billion. In addition the company also raised €0.2bn from internal capital raising measures. While the company also completed a liability management exercise which generated additional core tier 1 capital this did not improve the bank's overall capital position due to the existing capital treatment of its investment in the subsidiary Life Company. After all of these actions the remaining capital requirement for the company is €1.3bn. It was intended that the remaining capital requirement would be satisfied on completion of a successful disposal of a major subsidiary, with any shortfall provided by the State. However the sale was postponed on 25th November 2011 due to the extreme levels of volatility being experienced in the eurozone at that time.

Following the suspension of this sale process, we have decided that a government purchase of the subsidiary company will be the most effective mechanism to finalise the recapitalization of the company by 30 June 2012. The subsidiary is a valuable asset for the State and will continue to be managed on an independent commercial basis to ensure that value, and we will continue to work to dispose of it as soon as market conditions permit.

Any capital shortfall after the State has acquired the subsidiary will be met by the State.

The Government Budget 2012 projections include an allowance for the provision of the €1.3bn capital in June 2012.