Michael McGrath (Cork South Central, Fianna Fail)
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84. To ask the Minister for Finance if he expects an additional liability to the State to arise in respect of Newbridge Credit Union, County Kildare; and if he will make a statement on the matter. [6538/15]

Michael Noonan (Limerick City, Fine Gael)
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In November 2013, on foot of a request from the Governor of the Central Bank, I agreed to the payment to permanent tsb (ptsb) of a financial incentive of up to €53.9m to support the transfer of Newbridge Credit Union Ltd - excluding the premises, to ptsb. The financial incentive consists of:-

- €23m in cash up-front

- €4.25m for restructuring and integration costs

- €2m for other transferring liabilities, and

- a maximum additional €24.7m to cover additional costs resulting from all loans being written-off with nothing recovered. 

I have been informed by the Central Bank that the current position in respect of drawdowns to date and expected further expenditure from the Financial Incentives Agreement is as follows:

- Restructuring Costs payments to cover the establishment and maintenance of a recovery and underwriting platform for the Newbridge Credit Union loans. This is capped at a possible €3 million. To date, €1.3 million has been drawn down. The Central Bank expects to incur a further c. €0.2 million in such costs.

- Integration Costs payments to cover the costs of any redundancies of former Newbridge Credit Union staff. This is capped at a possible €1.25 million. To date, nothing has been drawn down, but the Central Bank expects to incur the full €1.25 million allocated to integration costs.

- Transferring Liabilities payments to cover liabilities that transferred to ptsb that were unknown at the point of transfer. This is capped at a possible €2 million. To date, €0.3 million has been drawn down. The Central Bank does not expect further drawdowns under this heading.

- Loss Compensation Payments payments to ptsb to cover deterioration in the performance of the Newbridge Credit Union loan book. The Central Bank has a 50/50 profit and loss sharing arrangement over a ten year period with ptsb in respect of these loans, so that the maximum cost the Central Bank can incur is €24.7 million if all of the loans defaulted. If the loans perform well, the Central Bank may have no liability under this heading, or could actually be paid by ptsb. Given the performance on the loan book to date, the Central Bank expects to incur some costs under this heading, although nowhere close to the capped amount.

In accordance with Section 46(6) of the Central Bank and Credit Institutions (Resolution) Act 2011, the sale proceeds generated by the sale of the Newbridge Credit Union premises (net of expenses) will be paid by NCU into the Credit Institutions Resolution Fund in due course. Under the Act, the Credit Institutions Resolution Fund is the principal creditor of NCU in the amount of the financial incentive paid or payable to ptsb.