Pearse Doherty (Donegal, Sinn Fein)
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169. To ask the Minister for Finance his plans to develop local or public banks based on the Sparkassen model here, directly or through facilitative legislation or regulation; and if he will make a statement on the matter. [6161/16]

Michael Noonan (Limerick City, Fine Gael)
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My Department have examined the concept of local public banking and its potential for Ireland. Officials examined how local public banking, with a focus on supporting SMEs, could complement existing Government policy and other initiatives already in place in a range of areas such as improving competition in the banking market, augmenting competition and innovation in the SME finance market and regional development.

Local or public Banks, such as Sparkassenin Germany, focus on the needs of SMEs in their catchment area rather than profit maximisation. This is very similar to the business model of the Strategic Banking Corporation of Ireland. It is encouraging to note that to the end of December 2015 almost €172 million has been lent through the SBCI to approximately 4,600 SMEs across Ireland in a wide variety of sectors and regions. 

Additionally, the Government has to date delivered a number of initiatives that already support increased access to finance for SMEs such as: The Supporting SMEs Online Tool, the Credit Guarantee Scheme, Microenterprise Loan Fund, Local Enterprise Offices and the Credit Review Office. Given the significant SME supports that have already been put in place by the Government to support SME financing it is not clear at present how local public banks could create a distinct product offering that would avoid replicating supports that are already available.

The Department of Finance, working with other relevant Departments and Agencies, will continue to monitor and analyse the SME finance market in Ireland and will keep the concept of local public banking under review within the parameters of overall banking policy. This will be done with a view to taking appropriate actions as warranted in order to ensure that SMEs in Ireland have the opportunity to reach their full potential in terms of growth and employment generation.

Pearse Doherty (Donegal, Sinn Fein)
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170. To ask the Minister for Finance his plans to apply for a retrospective recapitalisation of Ireland's pillar banking debt; and if he will make a statement on the matter. [6162/16]

Michael Noonan (Limerick City, Fine Gael)
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Following the creation of the Direct Recapitalisation Instrument (DRI) on the 8th December 2014, in accordance with Article 19 of the ESM Treaty, there now exists a specific provision which allows a potential retroactive application of the instrument on a case-by-case basis and by mutual agreement. This optionality remains in place 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.

I have previously stated that I see no benefit in making an application to the ESM at this time. Investors are now willing to support Irish banks again and the market value of our investments has improved accordingly. Ultimately it will be an assessment as to which route - ESM or the markets - represents the best value which will determine these decisions. My overall objective in relation to the State's investments in the banks has always been to maximise the return to the Irish taxpayer. 

In relation to AIB specifically, which is our largest investment, I have previously stated that an Initial Public Offering or IPO on the stock market looks like the most likely exit route for the State, however there is still work to be done in assessing how we might structure our gradual exit from the bank and particularly when we should start this process. My Department has recently appointed an Independent Financial Advisor, Rothschild, to provide advice in this regard. The appointment will help provide the Government with all the information and optionality needed to make an informed decision about our investment.