Thursday, 15 Nov 2012

Written Answers Nos 81-91

IFSC Clearing House Group

Questions (81, 88, 89)

Kevin Humphreys

Question:

81. Deputy Kevin Humphreys asked the Minister for Finance the number of times civil servants from his Department have sat at meeting of the IFSC Clearing House and related sub groups and working groups in 2012; if he will list those staff and their duties and the meetings they attended; if he will indicate in each instance the topics of discussions and the decisions that were made; if he will release the relevant briefing notes or reports prepared before and after each meeting by Departmental staff to this Deputy and the Joint Oireachtas Committee on Finance, Public Expenditure and Reform [50675/12]

Kevin Humphreys

Question:

88. Deputy Kevin Humphreys asked the Minister for Finance the number of times that staff from the Central Bank of Ireland have sat at meetings of the IFSC Clearing House and related sub groups and working groups in 2012; if he will indicate in each instance the topics of discussion and the decisions that were made; if he will release the relevant briefing notes or reports prepared before and after each meeting by the Central Bank staff to this Deputy and the Joint Oireachtas Committee on Finance, Public Expenditure and Reform; and if he will make a statement on the matter. [50720/12]

Kevin Humphreys

Question:

89. Deputy Kevin Humphreys asked the Minister for Finance the number of times that staff from the Revenue Commissioners have sat at meetings of the IFSC Clearing House and related sub-groups and working groups in 2012; if he will indicate, in each instance, the topics of discussion and the decisions that were made; if he will release the relevant briefing notes or reports prepared before and after each meeting by the Revenue Commissioners staff to this Deputy and the Joint Oireachtas Committee on Finance, Public Expenditure and Reform [50721/12]

Written answers

Minister for Finance

I propose to take Questions Nos. 81, 88 and 89 together.

The Department of the Taoiseach has supported the international financial services industry in Ireland since the establishment of the IFSC in 1987 by providing a forum for the exchange of views and the co-ordination of effort through the mechanism of the IFSC Clearing House Group and its related Working Groups. During this period, the IFSC has grown to employ 33,000 people and to contribute over €1 billion annually through corporation tax and payroll taxes.

These groups provide a forum in which the public sector can consult with industry representatives to discuss competitive threats facing the industry, and develop strategies for the industry to pro-actively support its own development in the global economy.

Representatives of my Department are available to meet with, and do meet with on a regular basis, representatives from many industry and civil society groups who are willing to engage in discussions on the difficult choices which need to be made in the current economic climate.

The Clearing House Group has five sub-groups, and meetings in the year 2012 have been as follows:

Clearing House Group:-

- The Clearing House Group has met on four occasions in 2012 to date. The Department of Finance was represented at all meetings, and representatives have included:-

- Second Secretary, Financial Services Division;

- One Principal Officer, Fiscal Policy Division;

- One Principal Officer, Financial Services Division;

Representatives from Revenue and the Central Bank also attended all of these meetings.

Asset Management Group:-

- The Asset Management group has met on three occasions in 2012 to date. The Department of Finance was not represented at any of these meetings. Representatives from the Revenue Commissioners attended one of these meetings, and representatives from the Central Bank attended all three of these meetings.

Banking and Treasury Group:-

- The Banking & Treasury Group has met on six occasions in 2012 to date. The Department of Finance was represented at all meetings, and representatives have included:-

- One Assistant Secretary, Financial Services Division;

- One Assistant Principal, Fiscal Policy Division;

- One Assistant Principal, Financial Services Division;

- Two Administrative Officers, Fiscal Policy Division;

Representatives of the Revenue Commissioners attended all of these meetings. Representatives from the Central Bank did not attend these meetings.

Funds Group:-

- The Funds Group has met on nine occasions in 2012 to date.

- The Department of Finance was represented on all meetings, and representatives have included:-

- One Assistant Principal, Fiscal Policy Division;

- One Assistant Principal, Financial Services Division;

- One Assistant Principal, Banking Division;

- One Administrative Officer, Fiscal Policy Division;

- One Administrative Officer, Financial Services Division.

Representatives from the Revenue Commissioners have attended three of these meetings, and representatives from the Central Bank attended all nine of these meetings.

Insurance Group:-

The Insurance Group has met on 6 occasions in 2012 to date.

The Department of Finance was represented at all meetings, and representatives have included:-

- One Assistant Principal, Fiscal Policy Division;

- One Assistant Principal, Financial Services Division;

- One Administrative Officer, Fiscal Policy Division;

Representatives from the Central Bank attended all of these meetings. The Revenue Commissioners are not represented on this group.

Pension Funds Group:-

- The Pension Funds Group has met on one occasion in 2012 to date.

The Department of Finance, the Revenue Commissioners and the Central Bank were not represented at this meeting.

In relation to the Deputy’s request for topics of discussions and decisions taken at meetings, the Taoiseach announced in the Dail on Tuesday, 13th November, that the minutes of meetings of the Clearing House Group which have taken place during the term of this Government to the end of September this year will shortly be published on the Department of the Taoiseach's website and on merrionstreet.ie. A Report on the work of the Group during this period will also be published on the websites. Additionally, the Secretary General of the Department of the Taoiseach and Chair of the Clearing House Group is to write to the Chair of the Oireachtas Committee on Finance and the Public Service offering to brief them on the work of the Clearing House Group.

While we accept the bona fides of the Deputy’s request for briefing notes or reports prepared by officials before and after these meetings, it is not practical to provide the information that the Deputy is seeking in the time available to formulate a reply to a parliamentary question. Accordingly, I suggest that following the publication of the material referred to in the previous paragraph, and the proposed briefing, the Deputy may wish to contact the individual Departments and Offices indicating what further detail he requires.

Bank Debt Restructuring

Questions (82)

Eoghan Murphy

Question:

82. Deputy Eoghan Murphy asked the Minister for Finance the number of persons that Allied Irish Banks, Bank of Ireland and the Irish Bank Resolution Corporation respectively have sought to have declared bankrupt in court over the past two years. [50683/12]

Written answers

Minister for Finance

I have been advised by the Banks that unfortunately it has been impossible to collate this information within this short timeframe. I will forward this information to the Deputy as soon as it is made available to me.

Question No. 83 answered with Question No. 29.

Banking Operations

Questions (84)

Gerry Adams

Question:

84. Deputy Gerry Adams asked the Minister for Finance if he has any plans to enforce a write-down on subordinated bondholders (details supplied) in Irish Bank Resolution Corporation; the amount paid thus far to the bondholder in interest payments; the amount likely to be paid to them when their bond matures; if he will confirm the amount the bondholder paid for their subordinated bonds in the former Anglo Irish Bank originally; and when these bonds were purchased. [50700/12]

Written answers

Minister for Finance

The Deputy is aware that under the Relationship Framework the Board of the bank is responsible for the day to day operations of the bank including the funding of the bank. I have not directed IBRC nor have I invited that institution directly to take voluntary losses on its subordinated notes other than when the named institution was invited to participate in IBRC’s liability management exercise in 2010. IBRC has a contractual obligation to pay interest and principal on the notes. The US$165m Subordinated Notes Series A due on 29 September 2015 currently bear interest at three month LIBOR plus 0.92% per annum.

Interest payments made since 29 December 2010 to date are as follows:-

- $504,411.60 29-Dec-10

- $504,409.95 29-Mar-11

- $517,595.10 29-Jun-11

- $491,557.92 29-Sep-11

- $536,043.85 29-Dec-11

- $623,852.39 29-Mar-12

- $586,390.75 29-Jun-12

- $575,825.25 29-Sep-12

The US$35m Subordinated Notes Series B due 29 September 2017 bear interest at 4.80% per annum to 28 September 2012 and thereafter reset at three month LIBOR plus 0.93% per annum.

Interest payments made since 29 December 2010 to date are as follows:-

- $840,000.00 29-Mar-11

- $840,000.00 29-Sep-11

- $840,000.00 29-Mar-12

- $835,333.34 29-Sep-12

I have been advised that the Bank cannot confirm the amount the named institution paid for the notes, as it was not a party to the transaction, nor the date, on which the institution purchased the notes.

Universal Social Charge Payments

Questions (85)

Seán Fleming

Question:

85. Deputy Sean Fleming asked the Minister for Finance the revenue that would be raised from increasing the universal social charge for all persons over 70 years to 7% on income over €100,000; and if he will make a statement on the matter. [50713/12]

Written answers

Minister for Finance

As the Deputy is aware, the standard rates of Universal Social Charge are:-

- 2% on the first €10,036,

- 4% on the next €5,980, and

- 7% on the balance.

However, the maximum rate of charge for such individuals who are aged 70 years or over is 4% irrespective of the level of their income, unless they have self-employment income in excess of €100,000 for a tax year, in which case the maximum rate rises to 7% on the amount of the excess over €100,000.

I am advised by the Revenue Commissioners that the full year yield, estimated by reference to 2013 incomes, from extending the additional universal social charge of 3%, which is currently applicable to self-employed income in excess of €100,000 in the hands of income earners aged 70 and over, to all income earners aged 70 and over at this level of income would be of the order of €3 million. The Universal Social Charge (USC) is an individualised charge and as such, the estimate of yield is based on individual incomes of more than €100,000.

The estimated yield is based on confining the 3% USC surcharge to the portion of income which is in excess of €100,000, that is, the increase is not applied to the portion of total income earned up to €100,000.

The figure is an estimate from the Revenue tax-forecasting model using actual data for the year 2010 adjusted as necessary for income and employment trends in the interim. It is, therefore, provisional and likely to be revised.

Universal Social Charge Payments

Questions (86)

Seán Fleming

Question:

86. Deputy Sean Fleming asked the Minister for Finance the revenue that would be raised from extending the universal social charge to social protection payments, excluding child benefit, that are currently exempt; and if he will make a statement on the matter. [50714/12]

Written answers

Minister for Finance

To estimate the potential yield from applying the universal social charge (USC) to social protection payments it would be necessary to identify certain details in respect of each recipient of social protection payments such as the individual amount of these payments received, the amount of any other income potentially liable to USC, the age of each individual and whether there was an entitlement to a medical card. This information would be essential to determine whether a charge to USC applied or not at individual level, and at what rate if it did. It is possible in many cases that the rate could be low or even nil. In addition, as the Deputy will be aware, a number of social protection payments would be below the current exemption threshold for USC which is currently €10,036 per annum. I am informed by the Revenue Commissioners that as they do not maintain such a database of social protection payments there is no basis on which an estimate of the yield from the change mentioned in the question could be compiled.

By way of illustration, if for example a 1 per cent levy was imposed on social protection payments, the full year yield to the Exchequer would be €180 million on the basis that the estimated provision for such payments in 2012, excluding child benefit, is approximately €18 billion. The figure of €18 billion excludes administration and other administration expenses but may include certain non-departmental operational costs. The estimate of Exchequer yield assumes that there is no exemption threshold, allowance or personal reliefs that could be used to offset against some of the levy.

Banking Sector Regulation

Questions (87)

Michael McGrath

Question:

87. Deputy Michael McGrath asked the Minister for Finance further to Parliamentary Question No. 64 of 12 July 2012, if Ulster Bank has made a formal application to change its regulatory or legal status or indicated its plans in this regard; and if he will make a statement on the matter. [50715/12]

Written answers

Minister for Finance

Further to Parliamentary Question No. 64 of 12 July 2012, the Central Bank has informed me that since that time it has not received a formal application, or formal plans, from Ulster Bank Ireland Limited to change its regulatory or legal status from that of a subsidiary of Royal Bank of Scotland Group.

Questions Nos. 88 and 89 answered with Question No. 81.

IFSC Clearing House Group

Questions (90)

Kevin Humphreys

Question:

90. Deputy Kevin Humphreys asked the Minister for Finance his views on whether it is appropriate for staff from the Central Bank of Ireland to sit on the IFSC Clearing House group when it is the regulatory authority for many of the banks and financial institutions located in the IFSC; if he is concerned at the potential for regulatory capture and previous mistakes being repeated by the Central Bank of Ireland being represented on a formalised lobbying forum; and if he will make a statement on the matter. [50726/12]

Written answers

Minister for Finance

Membership of the Clearing House Group is comprised of public and private sector representatives and reflects a wide range of experience and expertise so that its objectives of identifying opportunities to develop sustainable business and employment in the various sectors of the international financial services industry can be achieved. The primary focus of the group is to identify and consider issues of importance to the long-term development of the international financial services industry in Ireland in line with the Programme for Government which states that the Government “supports the future development of the IFSC as a source of future employment growth, subject to appropriate regulation ” and commits to the development of the financial services sector to maximise employment opportunities.

Since the inception of the IFSC, close cooperation between industry and the public sector has been a foundation of its success. It is entirely appropriate that the public sector works with companies that employ tens of thousands of people in Ireland, with a view to protecting and creating jobs and maintaining Ireland’s competitive position as a leading centre for international financial services.

The Central Bank participates in the IFSC Clearing House Group at the invitation of the Department of the Taoiseach. The Central Bank of Ireland makes a useful contribution to IFSC debates on the development of financial services policy based on its experience of regulation and knowledge of the technical matters under discussion. The Central Bank is satisfied that it conducts its regulatory and supervisory functions in an independent manner.

The IFSC strategy, which the Clearing House Group is tasked with implementation, sets out the very clear policy that “our future as an international financial services industry centre depends on having a credible, responsible and proper regulatory regime,” and a regime “that has the capacity to deal with the most complex international institutions and the increasing volume of EU and international requirements .”

Banks Recapitalisation

Questions (91)

Arthur Spring

Question:

91. Deputy Arthur Spring asked the Minister for Finance the action he has taken at a European level to address the recent revelation that Spanish banks have been securing funds at a lower risk premium than their Irish counterparts. [50741/12]

Written answers

Minister for Finance

As this is a Eurosystem issue relating to the application of the collateral framework rules, it is not under the direction of the Minister. However, please see below the comments from President of the ECB, Mario Draghi, when asked about the matter at the ECB press conference following the Governing Council meeting on 8 November; “Let me first make a clarification, because there has been a lot of press on this point in the last week. The first clarification is purely factual: the nominal amount of collateral being posted was not EUR 80 billion, but EUR 10 billion. The second clarification is that all this had no impact at all on our lending. So nobody received more than they should have received because of this mistake – because it was a mistake. The impact of this is zero, but we take this mistake very seriously. And so the Governing Council has mandated the Eurosystem Audit Committee, which is chaired by Governor Liikanen, to assess the implementation of the collateral framework in the Eurosystem and we will have an initial assessment of this at our next Governing Council meeting and then we will discuss whether further analysis or further action is needed and I will keep you posted on that.”