Vol. 826 No. 2
1. Deputy Michael McGrath asked the Minister for Finance the current state of the liquidation process for the Irish Bank Resolution Corporation; the level of discount he expects will apply to IBRC’s loan book; if he expects to make a payment to the National Asset Management Agency in respect of the loans it will take on; and if he will make a statement on the matter. [1767/14]
The purpose of this question is to get a sense of the status of the liquidation of IBRC. It is almost 12 months since this House passed emergency legislation to appoint special liquidators. The truth is that we are very firmly in the dark as to how that liquidation process is going in terms of valuations and the book value of the assets. Yesterday the Minister for Finance gave some indication of how much of those assets are likely to be sold with the balance being transferred to NAMA, but I hope he will take the opportunity today to update the House on what is an extremely important liquidation of a very large State-owned institution.
I am very pleased with the progress made to date in the liquidation of IBRC. The special liquidators continue to implement the orderly and efficient wind-down of IBRC in accordance with the provisions of the IBRC Act 2013 and instructions that have been provided to the special liquidators by me under the IBRC Act 2013.
In relation to the timelines set out in my instructions, I can confirm that the special liquidators completed the valuation of IBRC’s loan assets by 30 November 2013 and substantial progress has been made on the sale of IBRC assets. Sales processes for these assets had commenced by 31 December 2013, as required, and it is anticipated that the majority of sales will be completed in early 2014.
The first portfolio sale brought to the market by the special liquidators was concluded successfully in early December where the Evergreen portfolio, a portfolio with a par value of €2.5 billion, achieved sales to third parties of 84% of the total portfolio at values above the independent valuations. This represented a very successful outcome for the special liquidators and is further evidence of the significant interest of international investors in the Irish economy and its future prospects.
There is an obligation on the special liquidators to ensure the assets of IBRC are sold at a price that is equal to or in excess of the independent valuations that have been obtained. Should a bid not be received that is in excess of the independent valuation obtained, the loan asset will be acquired by NAMA at the independent valuation price. Sales to third parties will help to reduce the total amount of assets which are likely to transfer to NAMA as part of this process.
The sales process plan and timeline has been developed following professional advice and in light of requirements of a robust and credible sales process. The special liquidators have also corresponded with all IBRC borrowers providing them with an opportunity to make written representations on the method of disposal of their loans and the criteria for determining who may bid for loan assets. Consideration was given to borrower representations, and the special liquidators are in the process of responding to these borrower representations.
Additional information not given on the floor of the House
The IBRC loan books have been divided into portfolios and subsequently subdivided into tranches, depending on the professional advice obtained, for ensuring the maximum value is obtained for the sale of the loan assets and also to reflect feedback received from borrowers from the representation process.
In relation to the repayment of the debt owing to NAMA as a result of the promissory note transaction, I am pleased to note that a total of €1.225 billion has been repaid to NAMA by year end. The moneys repaid reflect both the proceeds of sales processes completed to date and also the scheduled and, in some cases, accelerated repayment of borrower obligations during the year.
As the Deputy is aware, the terms of the promissory note transaction created a potential liability for the State should the value of the IBRC assets be insufficient to cover amounts due to NAMA. However, while the exact outcome of the liquidation will not be known with certainty until the asset sale process has completed, I am pleased to note that, at present, the special liquidators do not expect a further call on the Exchequer to arise.
The fundamental question is when will we have a comprehensive picture of what is going on in respect of the liquidation of IBRC. That, in essence, is what I seek to find out. Is it not the case that the prohibition that exists in the case of NAMA, which we discussed at a meeting of the Oireachtas Select Sub-committee on Finance yesterday, preventing that organisation from selling loans back to the original NAMA debtors does not exist in the case of IBRC? My understanding is that there are IBRC debtors who are in a position to buy back their loans at a very significant discount and, as a consequence are essentially receiving a write-off of an enormous amount of debt, running into millions of euro, perhaps even hundreds of millions of euro. It is important that the Minister clarifies that point.
The Minister mentioned yesterday that approximately €6 billion of the €12 billion may well end up in NAMA. It would be important for him to clarify that this morning. Can he give us any assurance that the mortgage holders of IBRC will not in any way be disadvantaged and will not lose any of the protections they have under the code of conduct on mortgage arrears and the consumer protection code, irrespective of where their loans end up?
The special liquidators are appointed under legislation passed by the Houses of the Oireachtas and are working in accordance with that. That empowered the Minister for Finance to issue instructions. I issued instructions. They have valued everything up to 30 November and are proceeding to sell.
The special liquidators have divided the portfolio initially into tranches and have sold 84% of the first tranche and are involved now in bilateral negotiations with bidders who are marginally below the valued price so it will go above 84%. The level of interest being expressed on the first round on the other portfolios is very high too. While the figure I gave yesterday was a very rough estimate, it looks as if it might fall that way, that approximately half or so will be sold and the other half will go to NAMA. We do not have the actual figure yet.
The Deputy asked a question yesterday which I did not get a chance to answer on the old story of whether, when the liquidation is completed, there will be a black hole and the State have to put in money. That will not happen. The advice from the liquidators now is that they will at least come out of it on an even basis. It is too early to say yet until more sales go through, but the liquidators are confident enough that it will go through.
The Deputy is right to say that when the special liquidator legislation went through, because it was a liquidation, there was a possibility that debtors could buy their own loan books back. They have done that in the first round but because very valuable loan books were put up first, many have bought their own debt back at par and not at the enormous discounts the Deputy describes. There is some discount.
I thank the Minister for his reply. When will we see all of that information, even in aggregate form? The instruction the Minister gave was that the assets would be sold by 31 December or as soon as practicable thereafter. I think those were the words he used in the instruction to the special liquidators.
When will the drawbridge come down on this? Is it at the end of the first quarter this year that the liquidator will either have sold on the assets or the transfer to NAMA will take place, and the overall financial performance of the liquidator can then be assessed? When will we see the information and what will we see? Can the Minister give any reassurance to IBRC mortgage holders who are not getting any write-off whatsoever from the special liquidator, unlike some of the larger IBRC debtors, which the Minister has confirmed? In contrast, mortgage holders face the possibility of losing key statutory protections if the loan book ends up with an entity that is not regulated in Ireland, given the consumer protection code and the code of conduct on mortgage arrears would no longer be available to protect them. That is an outcome we need to avoid at all costs.
The liquidators are conscious of those issues. It would be impractical to sell mortgage by mortgage, so what is on sale is the mortgage book, and it will then be bought by some financial institution. I am assured that because one's mortgage arrangement is a matter of contract law, all the rights one had initially when arranging the mortgage will be preserved on the transfer, and the purchaser will have the same obligations as the original holder of the mortgage book.
Some protections are outside the contract because they are statutory protections. That is the point.
Yes, but the liquidators are aware of this.
On the Deputy's other question, there are code names on the different tranches. Evergreen, the first one I was describing, has a face value of €2.5 billion. Some 84% of this is gone already and more of it will go. The second one has the code name Sand, which has €1.8 billion of residential mortgages. The special liquidators have given significant consideration to, and have sought independent advice from PwC in regard to how the residential mortgage portfolio and other loans are to be dealt with. Following that independent advice, the special liquidators have decided that the residential mortgage book will be split into four segments consisting of performing, non-performing, owner-occupier and buy-to-let mortgages. This was believed to be the best portfolio mix to maximise interest in the sales. The portfolio valuation was completed on 11 September and the sales process commenced on 14 October.
There is another tranche, which is called Rock and Salt, for some reason, and it has a total par value of €7.3 billion, which is huge. That is effectively the UK loan book, to the value of €7.3 billion. The valuations were completed on 11 September and the sales process commenced on 28 October. The last tranche has the code name Stone and Pebble, which is, again, a huge portfolio of €9.3 billion of commercial real estate. The Pebble portfolio consists of commercial loans of €800 million. The valuation was completed on 11 October and the sales process commenced in mid-November. Therefore, they are more or less on target, although they asked for a little extra time with one of the portfolios because they thought they would get a better price, and so, rather than selling before Christmas, they left it until the new year. However, the extensions in time I have given them are marginal and, to date, as far as I am concerned, they are doing a pretty good job of disposing of the assets at prices higher than the valuation process.
2. Deputy Pearse Doherty asked the Minister for Finance the reason according to figures recently released by his Department that after nearly three years of this Government only 17% of mortgages in arrears of over 90 days in the six largest banks are in a permanent restructuring; and the reason the number of these permanent restructurings not performing is rising. [1796/14]
I am sure the Minister is aware of the reason this question was put down. While I acknowledge some very small progress in dealing with mortgage arrears, it is painfully slow. This is deeply frustrating for tens of thousands of families who are in mortgage distress and in arrears, and who have not had a long-term restructuring offer from the bank. The figures the Minister released recently show that only 17% of family homes have been restructured in the long term. I am sure the Minister is disappointed with that figure. What more is the Government planning to do in this regard?
The Government is aware of the significant difficulties some homeowners are facing in meeting their mortgage obligations and the Deputy will know that a comprehensive strategy to tackle the problem is in place. Implementation of that strategy is a major priority and, in that context, the Central Bank mortgage arrears resolution targets – or MART – framework is key. Under this rolling process, quarterly performance targets have now been set to the end of June 2014 to require the banks to propose and put in place durable long-term solutions to address the individual cases of mortgage arrears.
The Central Bank has indicated that all six mortgage lenders covered by the MART process have reported that they met the 20% proposed sustainable solutions target for the second quarter of 2013 and also the 30% target for the third quarter in 2013. In particular, with respect to the third quarter 2013 target of 30%, which is the latest available data from the Central Bank, the lenders have reported to the Central Bank they had issued proposals to 43% of mortgage accounts in arrears.
The new monthly mortgage restructures and arrears data published by my Department will also provide an impetus for those MART banks to increase the pace of provision of mortgage restructures. That data shows that some progress has been made in putting permanent mortgage restructures in place. For example, the number of permanent restructures of permanent dwelling mortgages more than 90 days in arrears has risen from around 41,200 in August to around 49,300 in November 2013, an increase of almost 20%. The number of permanent restructures of mortgages more than 90 days in arrears has also increased.
The ongoing roll-out of the MART process, in particular the incremental targets to put in place sustainable mortgage restructures, will be very important for this. Of course, the MART process can only work for the benefit of borrowers in circumstances where the borrower works with the lender and engages with the process. Likewise, lenders must also communicate and engage with a borrower in difficulty in line with the requirements of the code of conduct on mortgage arrears. Early and effective engagement between borrowers and lenders is, therefore, key to resolving cases of mortgage difficulty. A reduction in the number of early arrears cases, as evidenced in recent statistics, shows the benefit of early engagement between both parties. Where there is effective and meaningful engagement between the borrower and lender, the data is showing that an increasing number of durable long-term mortgage restructures is being put in place.
However, I agree with the Deputy that it will now be necessary this year for banks to significantly build on progress made to date. The issue of mortgage arrears is a major problem that needs to be resolved, not only for an individual borrower and lender, but also for the long-term economic and social health of the country. A comprehensive strategy to do this is now in place and the Government will ensure that it is fully implemented by all the parties involved in this process.
I have no doubt of the Minister's sincerity in wanting this issue resolved, and nobody in their right mind would want to see families that have fallen into this position being left lingering there. We are six years into a banking crisis and the Minister is in government nearly three years. I am sure that on the day he walked into his office in the Department of Finance, he would not have been satisfied if he had fast-forwarded three years and saw that only 17% of those in mortgage arrears of 90 days or more had been restructured on a long-term basis. It is a complete failure.
The Minister and the Central Bank have talked tough in the past in saying they would examine this and bring forward new initiatives. They need to start talking tough with the banks. I have been meeting with senior people in the banks. They tell me very clearly that if the Government and the Central Bank set targets, they will meet them. However, the way they are meeting them is through letters of repossession. The Minister can see from these figures, which he himself released, how the long-term restructuring is taking place, which is by way of arrears recalculation. There is no real, meaningful engagement and no urgency being sensed by the banks on this issue.
I agree with the Deputy that everybody in the House would like it if better progress was being made by the banks. Even though, as the Deputy said, there has been crisis in the banking industry for almost six years now, when I became Minister in March 2011, we effectively had a broken banking system. The doors were open but it was barely ticking over, and demoralised staff without capital were not able to do what banks should do, particularly in regard to mortgage arrears. It has taken a long time to mend and recapitalise the banks, and it has taken a long time for new management to restore some level of morale to the banking industry. The banks were completely deflated and many of them were incapable of doing what is required to be done. It has been a long process, disappointingly long, but we want to keep them on the targets that have now been agreed by them with the Central Bank. I am in constant meetings with the banks to ensure they meet those targets.
A permanent restructuring of a mortgage, even when the arrangements are made between the parties and the banks, has to be in place and successfully operating for six months, so there is clearly a time-lag between the audit of what is a permanent restructuring and the actual arrangement being put in place.
Deputy Doherty has concentrated on the end of the six-month period but if he looks at my reply, he will see that 43% of those in arrears over 90 days have now had proposals put to them which would resolve their problem. That figure will feed through over this year and there will be a better set of statistics. The Deputy is right. He is disappointed and I am disappointed. We all know what is happening on the ground. There is no lack of will in my Department to drive the process forward and make sure the banks do not resile from the targets to which they have agreed.
I welcome the fact that 46% have been offered deals but the devil is in the detail and when one goes into the detail, one finds from individual banks that thousands of those offers have been letters of repossession. None of us are going to dispute that. That is the reality. They tell us straight up that the penalty for not reaching the target is so severe that they will reach it and the easiest way they can do this is repossession. The problem is that this does not resolve the problem for genuine people who want to pay their mortgages and stay in the family homes and who want an offer of long-term restructuring.
I welcome the Minister's comments about his disappointment but it needs to go further. He needs to send out a clear message to the institutions under this process that there will be no more hokery-pokery with the figures and that repossessions on the scale on which they have been done to meet the targets are no longer acceptable. We also need to see long-term restructuring that goes further than arrears recapitalisation, which is the bulk of what is happening, and interest deferral. We must look at a greater range of issues around split mortgages in terms of debt write-down, debt for equity swap which is not happening, the Ulster Bank model and the economic concession model which seems very favourable as well. We need to see more of these measure and less of the legal letters to meet the targets.
Some months before Christmas, the relevant committee of the House containing many of the Deputies who are here examined the banks on this issue and highlighted the fact that repossession letters were not deemed to be a satisfactory solution. Deputy Doherty put down a question to me asking me what my view on that was. We do not deem letters of repossession to be satisfactory solutions. While we need to know the information about letters of repossession, they should not be put in the tot of what is a satisfactory long-term solution. The banks are now aware of that.
3. Deputy Joe Higgins asked the Minister for Finance if he will report on his meetings in 2013 with representatives and lobbyists from the financial services industry, the tobacco industry, the property industry and any other industry representative groups. [1756/14]
Could the Minister report on meetings he had in 2013 with representatives and lobbyists within the financial markets system, the tobacco industry, the property industry and other industry groups? This is all the more relevant in view of the information in recent days about the nauseating gouging of the Irish taxpayer by company consultants to Irish Water to the tune of €50 million.
Throughout the course of 2013, I engaged in a large number of meetings with a wide variety of economic and social representative groups. These meetings involving Department officials and I with representative groups are an important input into my work as Minister for Finance. They provide an opportunity to consider the key issues for a wide range of economic stakeholders in as efficient manner as possible. The following meetings are but a small sample of those which I have engaged in over the course of last year as they refer only to what can be categorised as meetings with representatives and lobbyists from the financial services industry, the tobacco industry, the property industry and any other industry representative groups, which was the key theme of the question.
On 7 May 2013, I along with the Taoiseach and the Minister for Justice and Equality met with the Irish Tobacco Manufacturers' Advisory Committee. The meeting concerned a general discussion on the smuggling of tobacco and its social and fiscal impact. On 12 June 2013, I met with Mr. Kevin Murphy, chair, and Mr. Pat Lardner, CEO, of the Irish Funds Industry Association, IFIA, while attending the IFIA Global Funds Conference at the Four Seasons Hotel. I was there to deliver an address to the conference. The meeting with the representatives of the IFIA was a courtesy meeting and took place on the fringes of the conference. The issues discussed were of a general nature, principally concerning the economy and the financial sector. On 24 July 2013, I met with the Small Firms Association. The discussion related to its pre-budget submission, which is available on its website. Among the topics discussed were employment costs, support for SME investment and job creation, access to funding, making work attractive, balancing the budget and the local property tax.
In addition, during the months of September and October as part of the budget 2014 process, I engaged in meetings with a number of representative groups including the Irish Business and Employers' Confederation, Retail Ireland, the Vintners' Federation of Ireland, the Licensed Vintners Association, Property Industry Ireland, the Irish Farmers' Association, the Construction Industry Federation and the Irish Creamery Milk Suppliers Association. In addition to these pre-budget meetings with industry groups, I also held meetings with the Irish Congress of Trade Unions, the Community and Voluntary Pillar, the Irish Heart Foundation and the Irish Cancer Society.
I note that the Minister did not include a number of financial services companies and big players in the financial markets that were detailed in an article in the Sunday Independent. He might clarify that. Does the Minister understand how frustrated many ordinary taxpayers are about the privileged access of big players and wealthy interests to the Minister for Finance and indeed the Taoiseach and Government generally while the taxpayers who are paying to bail out many of these interests have no such access? In the past few days, we were given information about the nauseating level of gouging of the taxpayers by consultants to Irish Water to the tune of €50 million, all of whom have been players on the lucrative inside track for years and have received millions of funds from taxpayers' assets. Since the Minister assumed office three years ago, did any of these companies that were named by Uisce Éireann in the past few days and that were favoured by Uisce Éireann with lucrative contracts have meetings with him and if so, what was the subject of those meetings?
Speaking from memory, I am not sure. It is not in the Deputy's question so the reply is not in my brief but if he puts down another question either for oral or written reply, I will get him the information immediately. It is unfair to come in and ask a different question entirely when I am prepared to answer the question that he put before us.
As regards meeting ordinary taxpayers and the Deputy's view that ordinary taxpayers have been much put upon and have a very onerous burden, all of us in this House agree with that. Of course, I meet ordinary taxpayers every week in my constituency. I am sure I meet as many ordinary taxpayers as any other Deputy in the House. I meet dozens of ordinary taxpayers every week all the time, as I am sure Deputies Pearse Doherty and Michael McGrath and everybody else here do. There is no lack of input about the concerns of ordinary taxpayers.
In deciding the meetings from the series of requests for meetings that I receive, I meet representatives from sectors of the economy that can help to grow the economy and give me an insight into what changes might be necessary to grow the economy and create jobs. They are the people who I principally meet. In pre-budget meetings, there are groups that have traditionally met with Ministers such the farming organisations, the Irish Congress of Trade Unions and the social pillar. I meet all those groups in the run-up to the budget to hear their views and concerns and see what kind of meeting of minds we might have in advance of the budget.
As the Minister knows, it was only in the past few days that we were given any information about the lucrative contracts awarded by Uisce Éireann. I wonder if he understands the outrage among ordinary taxpayers over this rip-off to facilitate a system being put in place that will gouge more taxes to pay more bond holders through taxing the water rather than fixing the pipes with the €500 million the Minister has allocated.
I wish to ask the Minister specifically about BlackRock asset management and Fortress Investment Group, which are huge hedge funds, venture capitalists and vulture capitalists.
Did the Minister meet any of these players in the financial markets? They were players in the crisis that developed as a result of the considerable speculation carried out by such companies for the ten or 15 years before the crash. They also cleaned up during the crash. If the Minister met them, what was the subject of those meetings?
I get several requests from people for meetings, but I cannot meet everyone. I try to meet those who can make a contribution to the economy. There have been many requests for meetings from people representing various funds that want to buy property in Ireland. Normally, they meet representatives of NAMA or the banks and come from abroad. There has been a run of people coming to Dublin, particularly in the past two years, who have been interested in buying property. Sometimes, it is difficult to distinguish between the people who have money and those who have fairy stories. I meet some of them. I met BlackRock on at least one occasion, but I believe it was before 2013. Its lead man in Dublin is an ex-Cork man. That is why I remember when that particular gentleman met me.
The purpose of these meetings on the other people's side of the table is to meet the Minister and ask questions about the availability of assets. I refer them to NAMA because I do not have detailed knowledge of values or quantities. When the Houses of the Oireachtas enacted the NAMA legislation, it vested all of that responsibility in NAMA. The Minister for Finance has no role in any of the commercial decisions taken by NAMA. There is a series of requests for meetings and I try to meet what I consider to be the important ones. Sometimes I get it wrong - I meet people and, after ten minutes, it is obvious that they are not what they purported to be. I meet many people when I am out socially who would have access to billions of euro and would buy half of the town if I would only give them a hearing. I am sure that Deputies Michael McGrath and Pearse Doherty meet them as well.
4. Deputy Michael McGrath asked the Minister for Finance when finance from KfW will be available to Irish small and medium-sized enterprises, SMEs; the amount of funding he expects to be available; the type of lending that will be undertaken; if a memorandum of understanding has been drawn up with KfW; and if he will make a statement on the matter. [1768/14]
As the Minister knows, the Taoiseach announced in November a new collaborative initiative with a German development bank, KfW. The purpose of my question is to seek additional information as to how the discussions between the Irish and German authorities have been proceeding. Will the Minister give the House a picture of how the new arrangement will work in practice and how KfW will be able to assist Irish small to medium-sized enterprises, SMEs, and provide funding for the wider Irish economy?
As the Deputy will be aware, the Taoiseach mentioned in this House shortly before the recess that he had held discussions with Chancellor Merkel on finding ways to reinforce Ireland's economic recovery by improving funding mechanisms for the real economy, including access to finance for SMEs. The German Government has asked KfW, the German development bank, to work with the German and Irish authorities swiftly in order to deliver on this initiative at the earliest possible date.
Officials at my Department, with the assistance of staff of the National Pensions Reserve Fund, NPRF, have worked quickly to investigate ways to ensure that the benefit of this co-operation to Irish SMEs can be maximised. A small party of my officials travelled to a meeting with their counterparts in Berlin in early December and a week later a similar meeting was held at KfW's headquarters in Frankfurt. Officials from KfW and the German Ministry also met with the project team from Ireland in Dublin for a further exchange shortly before Christmas. Both sides have been represented at senior management level for each engagement. In addition, there have been regular conference calls between the parties.
As the Deputy may be aware, KfW channels its funding for SMEs in Germany through a system of on-lending using commercial banks in Germany as the distribution mechanism. Typically, the SMEs can avail of KfW funding at different terms and conditions applicable to that offered directly by the financial institutions. This model is similar to the on-lending arrangements available to Irish domestic institutions using funds from the European Investment Bank, EIB.
The precise arrangements for the structure, level of funding and distribution options are the subject of the discussions between the relevant officials at present and will have to adhere to EU state aid considerations. Experience in other countries suggests that any lending facilitated by a state-sponsored investment institution like KfW is generally complementary to SME lending already taking place in an economy and can assist in improving both the supply and demand for finance.
The Government recognises that SMEs are the lifeblood of the Irish economy and play a crucial role in employment growth. Since March 2011, Government policy has concentrated on ensuring that viable micro, small and medium-sized enterprises have access to capital, equity and debt funding from a more diverse range of sources. The potential new arrangement with KfW, which my officials are exploring, represents a continuation of the Government's concerted focus on ensuring that viable SMEs have access to finance in a manner that supports economic recovery and employment growth.
I thank the Minister for his reply. Any potential new source of funding for SMEs is to be welcomed. I am seeking new information on the shape of the arrangement. The Minister referred to KfW in Germany extending finance to SMEs through commercial banks. As such, one would assume that a similar arrangement would apply in Ireland. This would necessitate the involvement of the Irish banks. I assume that it is not the intention that KfW would lend directly to Irish SMEs. If the Minister clarified this point, it would be helpful. He might also clarify whether KfW will require a banking licence in Ireland. Presumably it will not if it is lending through Irish banks. Have targets been set for the quantum of funding that might be available for the Irish economy from KfW? The fundamental question is when does the Minister hope that this arrangement will be up and running and available to SMEs in practice.
The very fact that an announcement was made to the effect that Chancellor Merkel and the German Government were instructing KfW to assist in financing SMEs in Ireland was one of the helpful factors in accessing the market at low interest rates last week, as it affected market sentiment at our exit from the bailout. There has already been a benefit.
What the tangible benefits will be is being worked out. Various models are being examined at official level. The matter has not come to the political level yet, but a paper is being prepared that will come to me shortly. Upon consideration, there must be a delivery vehicle in Ireland to get the money to the SMEs. The precedent is how EIB funds are delivered to SMEs. The EIB has lent €250 million to the main banks, AIB and Bank of Ireland, which decide in their normal lending processes who to lend on that money to. Perhaps something similar could be done. We will also introduce the NewERA legislation shortly, in which regard the strategic development fund and the NPRF may have a role. We are exploring different delivery possibilities.
This new initiative, which I welcome, is recognition of the fact that Irish banks are not meeting the lending needs of the economy fully. A new initiative such as this one is necessary. I acknowledge the Minister's point that the initiative's announcement helped to promote a positive backdrop for Ireland as we exited the programme.
Have the Irish banks been involved in discussions on the arrangement with Irish officials? As they are the most likely delivery mechanism for KfW funding to SMEs, it is important that this matter be clarified. If they have not yet been involved, it could be some considerable time before the arrangement is up and running and available to SMEs, which have been inquiring about this issue. Many SMEs are paying exorbitant interest rates, have onerous conditions attached to their lending arrangements with Irish banks and have been refused new credit applications. They are looking to this initiative with some degree of optimism. It is important that we give them as much information as possible as to its shape, whether it is likely to benefit them and whether it will be administered through Irish banks, which are regulated in Ireland.
The initiative should be seen in the context of the Government's overall policy of identifying and putting in place sources of lending to the Irish economy, other than lending directly from the main banks. There are three funds now operating out of the National Pensions Reserve Fund, Silicon Valley Bank has a $100 million fund to lend to IT companies, the Department of Jobs, Enterprise and Innovation has a micro investment fund and there are various other sources of lending now available. In fact, we are at a quite advanced stage with one of the Chinese investment funds to put another piece in place. If one sees it as a series of sources of funding to different types of SMEs in Ireland, some for working capital and some for start-ups, there is a range of options and this would be another option. That is the context in which it should be seen.
The banks are in the loop. They are not involved in the discussions, but the Department of Finance is keeping both the Central Bank and the main banks fully informed of what might happen. So far, there does not appear to be any difficulty in using the commercial banks as a vehicle for delivering money to SMEs sourced from KfW. I do not know about quantums; I do not expect it to be massive amounts of money, but it is another significant source of funding to SMEs.
5. Deputy Thomas Pringle asked the Minister for Finance his views on the lists of politically exposed persons under Anglo Irish Bank-Irish Bank Resolution Corporation; the reason lists were deemed necessary; the way they have been used; if he was aware of the lists and the contents of these lists; and if he will make a statement on the matter. [1757/14]
This question arises from reports in recent weeks that the Irish Bank Resolution Corporation, IBRC, or Anglo Irish Bank, as it was previously known, compiled a list of politically exposed persons and high profile persons who were borrowers from the bank. The question seeks to find out why the bank considered these lists necessary, what knowledge the Department of Finance and the Minister had of them and what use was made of these lists.
Following a site inspection the Department’s Forest Service inspector reported that remedial works are required on this site. A remedial works letter issued to the applicant on 13 January 2014 detailing the work required. The applicant should notify the Department on completion of works to allow an inspection to be carried out. The matter will be re-considered as soon as the site is up to the required Departmental standard.
The Minister says these lists were compiled in response to the 2010 Act. When were the lists compiled in response to it? How do we know, and what assurances can we have, that these politically exposed persons or high profile persons did not receive any preferential treatment when dealing with their accounts in this institution? It is vital that people be reassured that these lists were not compiled in order to identify people who could receive preferential treatment.
The lists were compiled before the liquidation took place, but I do not have the exact date. It was compiled by Anglo Irish Bank and IBRC prior to the liquidation taking place. It is part of the process of the liquidation to ensure that nothing untoward happened and if the liquidator comes across anything that could be deemed a criminal offence, he has an obligation to report that to the Garda Síochána. So far, the special liquidator assures me that he has not encountered anything which would amount to malpractice or the like. His study of those issues is ongoing, but I am not the person to whom he would report. However, in conversation with him about the process of the liquidation these things arise.
The main point is that this was not an initiative taken by IBRC to list its well known customers for any other purpose than complying with the Criminal Justice Act 2010. It is to do the opposite of what the Deputy suggests, to avoid preferential treatment being given to people because of their place in society, because they were important in a State agency or because they had political power.
The issue with politically exposed persons is that the political exposure could be used in different ways. Some high profile people who appear to be on the list have received debt write-downs from the IBRC, while other people have been taken through the full remit of the courts and the law and have been bankrupted in the course of that. We must be assured that these lists were only complying with the Criminal Justice Act 2010 and that no preferential treatment was given to anybody on them. It is incumbent on the Minister to ensure that is the case. Perhaps the Minister would also inform me of the date these lists were compiled.
I believe I dealt with the issue. Many members of the public would find it surprising that this provision is in the Criminal Justice Act 2010 but, on reflection, it is quite a good provision. I hope it is being honoured across the banking system. I will get that date for the Deputy and communicate in writing to him.
