Dáil Éireann Debate, Tuesday - 20 November 2012
218. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question No. 205 of 13 November 2012, if he will confirm if 100% of the transfer of €1.1 billion to the Allied Irish Bank pension fund was required to fund the bank's early retirement and voluntary severance programme; and if not, the quantum required to fund a pre-existing deficit. [51371/12]
View answerAIB has informed me that the transfer of the €1.1bn portfolio of loan assets was made using arm’s length valuations by two independent external parties and was agreed by both the Trustee and the Board of the Bank. There was a very significant discount applied to the nominal value of the €1.1bn loan assets. AIB has not publicly disclosed the discount applied to the loan portfolio on commercial grounds. The full value of the discounted loan portfolio was required to facilitate the early retirement programme. The transfer of these assets to the pension fund was needed in order to facilitate the early retirement component of the voluntary severance program of the bank. The early retirement scheme created a Minimum Funding Standard deficit in the pension fund which was bridged by the transfer of the assets. Had the transfer of assets not taken place, the early retirement component of the voluntary severance could not have proceeded as it would have required a cash contribution from the bank. The voluntary severance scheme in the bank overall is expected to result in annual savings to AIB in excess of €200m which is a critical component of AIB’s return to viability.
This transaction was approved by the Board of the bank’s deleveraging committee which includes non-voting observers from the department of Finance and the Central Bank.
