Written answers

Wednesday, 24 October 2012

Department of Finance

Banking Operations

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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To ask the Minister for Finance if he was consulted prior to the transfer by Allied Irish Bank of €1 billion in loans to the company pension fund; the funding position of the AIB pension following the transfer; if this transfer counts towards the bank's deleveraging target; the action he took to ensure that the interests of the State as the majority shareholder in AIB was protected; and if he will make a statement on the matter. [46658/12]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The transfer of €1.1bn (gross) loans assets to the AIB Defined Benefit Pension Scheme was approved by the AIB Board and the Bank's Deleveraging Committee whose members include officials from the Department of Finance and the Central Bank of Ireland in observatory capacities. I am informed by the Bank that the transfer of assets into the AIB pension scheme enabled the Trustee to satisfy the increase in the Minimum Funding Standard requirement. The contribution of these assets, combined with other measures, has significantly improved the Scheme’s actuarial funding position.

This transaction forms part of AIB’s continuing strategy to meet non-core deleveraging targets of €20.5bn by December 2013 as set out by the Central Bank of Ireland. Including this transfer, AIB’s total net non-core deleveraging to end September represents 80% of AIB’s overall deleveraging target and exceeds the 2012 deleveraging target.

The transaction was completed on an arm’s length basis with both the bank and the pension scheme trustees conducting independent valuations of the assets. The Bank has also informed me that it is comfortable that the transfer value of the assets represented a fair price for the bank relative to any open market sale and was in line with the 2011 Prudential Capital Assessment Review (PCAR) assumptions agreed with the Central Bank.

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