Michael McGrath
Question:83 Deputy Michael McGrath asked the Minister for Finance in view of the results of the bank stress tests, if he will provide details of his plans for the future of a bank (details supplied). [6584/11]
View answerTuesday, 5 April 2011
Questions (70, 71, 72)
Written answers
As I stated in the Dáil last week, a new bank will be created from Bank of Ireland which will be smaller, more focused on core operations, better funded and better capitalised and more focused on serving the economy of the island of Ireland. The bank will split into separately managed non-core and core divisions and will begin to shed €30 billion of assets by 2013. It will become a significantly more domestically focused bank and retain its businesses in Northern Ireland, its Post Office joint venture in the United Kingdom and limited capital markets businesses.
The bank will be given time to raise additional private capital and limit the State's need to invest in the banks but the Government will step in to ensure that the bank meets the Central Bank capital requirements if it needs to. The situation will become clearer after the release of the bank's Annual Results expected shortly.
Michael McGrath
Question:84 Deputy Michael McGrath asked the Minister for Finance in view of the results of the bank stress tests, if he will provide details of his plans for the future of a bank (details supplied). [6585/11]
View answerI stated in my statement of 31 March 2011, to the Dáil on banking matters, that the banking system must be the enabler of economic recovery by restoring public and market confidence in its financial health, management competence and ethical integrity. Consequent upon the results of the banks stress testing and to achieve the above objective, the Government has decided to reduce the number of domestic banks by creating two new strong universal Pillar banks which will be fully recapitalised with a view to instilling confidence in these institutions both domestically and internationally.
The Government intends to combine the operations of AIB and EBS Building Society to build one of the two Pillar banks from the strengths of both institutions subject as necessary to any approval required under State Aid rules. This Pillar bank will then reorganise its operations into core and non-core functions to better serve the economy as a functioning bank by providing services and credit it needs. It will be a largely domestically focused bank, retaining its Northern Ireland operations and certain deposit funded operations in the UK. The non-core division of the combined entity will see deleveraging of €23 billion of assets by 2013. The publication of the bank's annual results expected shortly will further clarify the situation.
Michael McGrath
Question:85 Deputy Michael McGrath asked the Minister for Finance in view of the results of the bank stress tests, if he will provide details of his plans for the future of a bank (details supplied). [6586/11]
View answerI stated in my announcement of 31 March 2011, to the Dáil on banking matters, that the banking system must be the enabler of economic recovery by restoring public and market confidence in its financial health, management competence and ethical integrity. The Government has decided to reduce the number of domestic banks by creating two new strong universal Pillar banks which will be fully recapitalised with a view to instilling confidence in these institutions both domestically and internationally.
Consequent upon the results of the stress testing on Irish Life and Permanent (ILP) and the determination of its capital requirements by the Central Bank, ILP must raise a substantial additional equity capital which will require a significant restructuring of their business and the disposal of certain non-banking assets. The sale of these assets should raise significant capital for the Group. It is the intention of the State, subject as necessary to any approval required under State Aid rules, to provide the remaining capital to the Group which will involve, in all likelihood a majority stake in the Group being held by the State. This approach will provide sufficient flexibility to the State to decide where the Group fits into the planned revised banking landscape outlined above as the radical restructuring of the Group evolves.
Question No. 86 answered with Question No. 74.