Dáil Éireann Debate, Wednesday - 22 February 2012
42 Deputy Gerry Adams asked the Minister for Finance if the profits derived by the Central Bank of Ireland from Irish Bank Resolution Corporation’s emergency liquidity assistance repayments are kept in full by the Central Bank of Ireland or shared with the other central banks in the European system of banks; and if he will make a statement on the matter. [9956/12]
View answerOne of the functions of the Central Bank, similar to other central banks, is to grant Exceptional Liquidity Assistance or ELA to a credit institution when this is deemed necessary for financial stability purposes. These amounts are published monthly. The Central Bank cannot disclose the financial institutions that avail of such support although it is open to all eligible counterparties to apply for such funding. ELA is one of the ways that the Central Bank has responded to the financial crisis. This is distinct and separate from regular funding operations carried out for monetary policy implementation purposes through the ECB. A loan provided to a credit institution under Exceptional Liquidity Assistance is granted against suitable collateral, where suitability is in line with unpublished criteria defined by the Central Bank. As with procedures for ECB eligible collateral, appropriate haircuts/discounts are applied with a view to ensuring that the Central Bank would not suffer any loss in the event of default on the loan assistance. The Bank has received formal comfort from me as Minister for Finance such that any shortfall on the liquidation of the collateral will be made good. Further details on ELA is available in the bank's Annual Report for 2010 in Note 1(v) and Note 20(iii) on pages 93 and 104 respectively.
43 Deputy Sandra McLellan asked the Minister for Finance if Irish Bank Resolution Corporation requires the full €47 billion of the promissory note, that is the €30 billion capital and €17 billion interest, in order to pay off its liabilities in full or is the amount required to have its liabilities paid in full a lesser amount; if so, the amount which could result in the winding up of the bank at an earlier date; if so, the date at which those liabilities would be paid under the current schedule; and if he will make a statement on the matter. [9958/12]
View answerThe interim accounts published by the bank for the 6 months ended 30 June 2011, which are the latest published figures, shows a total liability figure of €50,677 million. In effect this is the amount required to pay off its liabilities in full. In addition a further €3,404 million represents the State's equity in the institution. If one assumes that the assets will cover some of the liabilities, even in a worst case scenario it would not be unreasonable to expect that the full €47 billion might not be required. That said, the Deputy will appreciate that much of the further information requested in the question is subject to external factors and that it is not practical to be definitive in terms of timelines or costs at this point. Suffice to say that the Board of the bank is charged with the work-out of the bank's assets in a manner that will best protect the interests of the State.
However, the framework within which the bank is operating is set out in the EU Commission Decision on the restructuring plan which issued on 29.6 2011. The link below provides access the redacted version of the Decision.
IBRC is working to generate options for the efficient work out of its loan books in accordance with the Bank's approved mandate. This includes examining accelerated disposal where this makes economic sense. Following the timely sale of the majority of the Bank's US loan portfolios, the bank now continues with further detailed analysis of the remaining loans in Ireland and the UK. This analysis will further inform the Board and management team of IBRC on the timing of the next phases of deleveraging. The exact value of its remaining loans will be reported in the Banks annual report and accounts which are due for release next month. The final cost of rescuing the institution is estimated to be within the current capital provided by the State and will predominately be a function of the property markets in Ireland and the UK together with the availability of counterparty liquidity to enable further disposals by way of recoveries, repayments and sales. It will also depend on the outcome of any negotiations on the promissory note between the Government and the EU that are still under way. The estimated timeframe for the resolution of the institution is currently nine years as detailed in the Bank's approved restructuring plans. http://ec.europa.eu/competition/stateaid/cases/239466/2394661251121213.pdf
