Written answers

Tuesday, 7 May 2013

Department of Finance

Banks Recapitalisation

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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133. To ask the Minister for Finance his latest estimate of the gross and net cost of bailing out Anglo Irish bank and Irish Nationwide Building Society. [21179/13]

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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134. To ask the Minister for Finance further to Parliamentary Question No. 283 of 18 September 2012, in which he stated the bank's CEO has given an indication previously that the likely outcome for Anglo Irish Bank would be in the €25-€28 billion region, if, following the planning of the special liquidation of Irish Bank Resolution Corporation from October 2012 when he stated that he first consulted KPMG on the matter and following the appointment of a special liquidator on 6 February 2013, his views on whether this outcome of €25-€28 billion still holds. [21180/13]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 133 and 134 together.

It is important to note that comments made by the former executives in IBRC were based on the assumption that IBRC was to continue as originally planned and that payment of interest and capital on the Promissory Notes would also continue which is not now the case. There are numerous benefits from the arrangements that have been undertaken. There are efficiency gains from housing ‘legacy assets’ in a single vehicle, NAMA. Exceptional Liquidity Assistance and the inherent risk associated with short term borrowings has also been removed from the Irish banking landscape. There is also an expected reduction in the underlying deficit by c.€1 billion per annum over the coming years with a reduction in government debt over time. These all need to be taken into account in assessing the benefits of the IBRC liquidation.

It is far too early to predict the outcome of the liquidation process and the overall cost for the State in relation to IBRC. It will not be possible to conclude for certain whether the value of the assets to be sold by the Special Liquidators, is sufficient to compensate NAMA for the amount paid for the net IBRC debt that it has acquired, until the valuation of those assets has been completed.

As part of the role of the liquidators, the assets of IBRC will be valued independently before being sold. Any assets not sold to third parties at or above the valuation price will be sold to NAMA at the independent valuation. This ensures a ‘floor’ price on the assets of IBRC and that where required, assets with limited sale potential now, can be worked through in the medium term by NAMA rather than sold to the best available third party at any price. This approach ensures a fire sale of assets will not occur. This Government’s approach is consistent and focused on the best outcome for the Irish State and its people.


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