I propose to take Questions Nos. 103 and 113 together.
The recapitalisation commitments made by the State to date and the additional capital requirements of the banks as prescribed by the Central Bank under the March 2011 PCAR/PLAR stress tests are set out in the following table:
Recapitalisation of Credit Institutions
Credit Institution
|
Cost of Share Acquisition
|
Cost of Preference Shares
|
Capital contributions
|
Capital Provided by the State to 31 December 2010
|
PCAR 2011 requirement
|
Contingent Capital
|
Mar 31st Total(1)
|
|
€bn
|
€bn
|
€bn
|
€bn
|
€bn
|
€bn
|
€bn
|
Anglo Irish Bank
|
4.0
|
—
|
25.3
|
29.3
|
—
|
—
|
0.0
|
Allied Irish Banks
|
3.7
|
3.5
|
—
|
7.2
|
11.9
|
1.4
|
13.3
|
Bank of Ireland
|
1.7
|
1.8 (2)
|
—
|
3.5
|
4.2
|
1.0
|
5.2
|
Irish Nationwide Building Society
|
0.1
|
—
|
5.3
|
5.4
|
—
|
—
|
0.0
|
EBS Building Society
|
0.6
|
—
|
0.3
|
0.9
|
1.3
|
0.2
|
1.5
|
Irish Life and Permanent
|
—
|
—
|
—
|
—
|
3.6
|
0.4
|
4.0
|
Total
|
10.1
|
5.3
|
30.8
|
46.3
|
21.0
|
3.0
|
24.0
|
(1) Before banks’ potential capital raising actions (LME’s/Asset Sales / Internally Generated Capital)
(2) Original investment of €3.5bn, of this €1.7bn converted to equity in May 2010
The Deputies will be aware that the Government has, however, instigated processes which have reduced and will further reduce the cost to the State by looking for significant contributions from subordinated debt holders, by the sale of assets to generate capital and, where possible, by seeking private sector investors. It is expected that the effect of these actions will be to reduce the amount of capital required by the State very significantly. In particular, a number of the financial institutions have recently engaged in liability management exercises in relation to subordinated debt. The results of the liability management exercises at the AIB, Bank of Ireland and Irish Life & Permanent will be announced in full to the markets on their conclusion but have already resulted in the generation of some €4.4bn in Core Tier 1 Capital, reducing accordingly the amount required to be contributed by the State to the €24bn PCAR capital requirement.
Only after the burden sharing measures have been completed, all sources of private capital have been exhausted and shareholders in the three institutions have been given the opportunity to vote, will the level of further capital required to be contributed by the State in order to complete the recapitalisation measures be finalised to the level of detail being requested by the Deputies. However, the State has committed to completing the recapitalisations as agreed under the Programme of Financial Support for Ireland to the extent possible by 31 July. State funding for the recapitalisation will come from funds currently held on deposit in the banks by the Exchequer and the National Pensions Reserve Fund.