Terence Flanagan (Dublin North East, Independent)
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47. To ask the Minister for Finance if he will provide an update regarding negotiations in relation to support from the European Stability Mechanism for retrospective recapitalisation of our banks; and if he will make a statement on the matter. [49615/13]

Michael Noonan (Limerick City, Fine Gael)
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The Euro Area Heads of State or Government agreed in June 2012 to break the vicious circle between banks and sovereigns, and that when a Single Supervisory Mechanism, involving the ECB, is in place and operational, the European Stability Mechanism (ESM) could recapitalize banks directly.

The Eurogroup meeting of 20th June 2013 agreed on the main features of the ESM’s Direct Bank Recapitalisation (DBR) instrument. The DBR instrument will come into effect when the Single Supervisory Mechanism is in place and operational. This is not expected to take place until the second half of 2014. There is a specific provision for retrospective recapitalisation included in the main features. This provision states that “The potential retroactive application of the instrument should be decided on a case-by-case basis and by mutual agreement.” Therefore, the agreement that we were active in negotiating keeps open the possibility to apply to the ESM for a retrospective direct recapitalisation of the Irish banks should we wish to avail of it.

The overall framework agreed this summer builds upon the earlier Euro area Heads of State or Government agreement secured on the 29th of June 2012 and is an important step in the Eurozone’s efforts in this regard.

The October 2013 European Council called on the Eurogroup to finalise the detailed guidelines for ESM direct recapitalisation so that the ESM can have the possibility to recapitalise banks directly, following the establishment of the Single Supervisory Mechanism.

Terence Flanagan (Dublin North East, Independent)
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48. To ask the Minister for Finance the cost for the next five years of being a member of the European Stability Mechanism; and if he will make a statement on the matter. [49616/13]

Michael Noonan (Limerick City, Fine Gael)
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The European Stability Mechanism Act, 2012 provides for Ireland's membership of the European Stability Mechanism (ESM) and payments into it. Section 3 of the Act provides for payments to the ESM out of the Central Fund. In July 2012 the European Stability Mechanism Act was signed into law and in August 2012 Ireland deposited its instrument of ratification for the Treaty establishing the ESM. The Treaty provides for a total capital subscription of €700 billion, of which €80 billion is paid-in capital. Ireland’s total share of the paid-in capital is €1.27376 billion, based on our percentage share of the ESM total paid-in capital which is 1.5922%. This paid-in capital is to be paid in five equal tranches of €254,752,000 up to April 2014. The Eurogroup (Euro Area Finance Ministers) agreed in September 2012 that two tranches of capital would be paid in 2012, both in October, following the ESM’s entry into force. The ESM entered into force as of 27th September 2012, and Ireland’s first two tranches of €254,750,000 were paid together on 11th October 2012, resulting in a total payment of €509,504,000.

The third tranche of €254,752,000 was paid on 19th April 2013.

The fourth tranche of €254,752,000 was paid on 29th October 2013.

The agreed payment schedule is that the remaining fifth tranche (again of €254,752,000) will be paid in April 2014.