Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Question 20: To ask the Minister for Finance if he will explain the rationale for the purchase of Irish Life and Permanent last month and the reason the decision to spend €1.3 billion of taxpayer's money on this company was not brought before Dáil Éireann for approval in advance of the purchase. [19310/12]

Michael Noonan (Limerick City, Fine Gael)
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As a result of the March 2011 PCAR Irish Life and Permanent plc. t/a Permanent TSB ('PTSB') was required to raise total 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 Irish Life, with any shortfall provided by the State if that arose. The sale of Irish Life was suspended 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 Irish Life is the most effective mechanism to finalise the recapitalisation of the company by 30 June 2012 in line with the commitment in the Memorandum of Understanding with the Troika. The High Court issued a Direction Order on 28th March 2012 allowing me to purchase Irish Life from Irish Life and Permanent Group for a total consideration of €1.3 billion. The Direction Order is not yet effective due to the receipt of number of applications to have the Order set aside but I will be strongly defending these challenges and am hopeful that the acquisition will be completed before 30 June 2012.

The company 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.

It is my intention to use the powers available to me under the Credit Institutions (Financial Support) Act 2008 to acquire Irish Life and complete the recapitalisation of PTSB. The 2008 Act is an act to 'provide for' financial support by the Minister in respect of certain credit institutions of which Irish Life and Permanent Group Holdings is one. Section 6 of the 2008 Act permits me to provide financial support (whether directly or indirectly) to those credit institutions up to June 2017.