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Financial Institutions Support Scheme.

Dáil Éireann Debate, Wednesday - 3 February 2010

Wednesday, 3 February 2010

Questions (67, 68)

Willie Penrose

Question:

127 Deputy Willie Penrose asked the Minister for Finance the way he expects the losses and loss provisions on the mortgage loan books of the credit institutions covered by the bank guarantee to evolve over the coming years; if he expects the Exchequer to have to provide capital to any of the covered institutions as a direct result of losses accruing on these mortgage loan books, above and beyond capital provided as a result of losses relating to loans transferred to the National Assets Management Agency; and if he will make a statement on the matter. [5313/10]

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Written answers

As the Deputy will be aware, the covered institutions have made, and will no doubt continue to make as necessary provisions for impaired loans, including impairments on expected losses on their mortgage books. It is a matter for each institution's own Board to decide as to the level of provisions to set aside for future write downs, it would therefore be inappropriate for me to comment or speculate on the mortgage books of individual institutions.

I stated in my Second Stage speech on the NAMA Bill that it is likely that some institutions will require additional capital in order to absorb the losses arising from the transfer of their impaired assets to NAMA and in order to maintain appropriate levels of capital. I also said that if sufficient capital cannot be raised independently or generated internally, that the Government is committed to providing such institutions with an appropriate level of capital to continue to meet their requirements in a manner consistent with EU State aid rules and the credit needs of the Irish economy.

Ciaran Lynch

Question:

128 Deputy Ciarán Lynch asked the Minister for Finance the amount of money that has accrued to the State from the bank guarantee; the amount of this income now on deposit at the Central Bank; if income from the new eligible liabilities guarantee scheme will continue to be paid into the central bank deposit account; if any transfer is foreseen from this account to the central fund; and if he will make a statement on the matter. [5315/10]

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Each of the covered institutions covered by the Bank Guarantee Scheme pays a quarterly charge to the Exchequer for the guarantees under the Credit Institutions (Financial Support) Scheme 2008 (CIFS) and the Eligible Liabilities Guarantee (ELG).

The amount of money paid under CIFS in the mandated Central Bank account, including interest accrued to date, is €718,360,000.

We intend to collect at least €1bn from the guaranteed institutions for institutions covered under CIFS and ELG guarantees for the period September 2008 to September 2010. After the expiration of the Covered Institutions (Financial Support) Scheme in September 2010, money collected will be transferred to the Central Fund. It is my intention that income from the Eligible Liabilities Guarantee will be paid into a separate Central Bank account which will be transferred into the Central Fund.

In addition to the charge for the Guarantee levied on the covered institutions, institutions under the Guarantee are obliged to recoup the administrative costs of the Guarantee to the Minister. To date payments of €2,495,459 have been made and received by my Department as an appropriation-in-aid, covering the period September 2008 to April 2009. There will be further charges made periodically between now and the end September 2010 when the Scheme is due to end.

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