Michael McGrath (Cork South Central, Fianna Fail)
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81. To ask the Minister for Finance if Ireland has prepared an application to the European Stability Mechanism for retrospective recapitalisation of the banks; the earliest date on which such an application would be considered; and if he will make a statement on the matter. [15092/15]

Michael Noonan (Limerick City, Fine Gael)
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As you will be aware, the Euro-area Heads of State or Government (HoSG) agreed in June 2012 that "it is imperative 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.

On 8 December 2014, the ESM Board of Governors approved the creation of the Direct Recapitalisation Instrument (DRI) in accordance with Article 19 of the ESM Treaty. The operational framework for the DRI, approved on the same date, includes a specific provision in relation to the retroactive application of the instrument. The guideline states that the potential application of the instrument for this purpose should be decided on a case-by-case basis and by mutual agreement. 

However, unlike back in 2012, the ESM is no longer the only option open to us to recover the money provided to recapitalise our banks. Investors are now willing to support Irish banks again and the market value of our investments has improved accordingly. My overall objective in relation to the State's investment in the banks is to maximise the return to the Irish taxpayer over time.

In line with this objective my Department is working with AIB, the institution where €20.8 billion has been invested, on reconfiguring the capital structure.  I have also appointed Goldman Sachs International to provide financial advice. The focus will be on ensuring that the best decisions are made regarding potential capital restructuring options and sequencing in order to maximise the return of cash to the State from our AIB investments over time. While this is just the start of the process, it is an essential first step on the road to recovering value for the taxpayer. All options remain on the table and it is too early to specify what steps will be taken next or indeed to put a timeline on decisions.

In relation to our Bank of Ireland investments, the Deputy will be aware that we have already made a net positive cash return from our investment in and support for the bank, while we continue to hold a valuable equity investment. Lastly in relation to ptsb, the situation there is that the company is well advanced in executing a private sector fund raising to satisfy the shortfall identified in the ECB's Comprehensive Assessment exercise.