Wednesday, 28 Nov 2012

Written Answers Nos. 75-83

Credit Availability

Questions (75)

Gerry Adams

Question:

75. Deputy Gerry Adams asked the Minister for Finance if, further to Bank of Ireland Chief Executive Richie Boucher’s appearance at the Oireachtas Committee on Finance, Public Expenditure and Reform on the 1 of November 2012 that €3.5 billion comprises new and increased lending to customers, he will seek a breakdown from the bank of what percentage of that €3.5 billion is new lending and what percentage is increased lending; if he will confirm if that €3.5 billion includes the giving of a new facility as new lending; and if he will make a statement on the matter. [53220/12]

Written answers

Minister for Finance

The Government has imposed SME lending targets on Bank of Ireland and AIB for the three calendar years, 2011 to 2013. Both banks were required to sanction lending of at least €3 billion in 2011, €3.5 billion this year and €4 billion in 2013 for new or increased credit facilities to SMEs. Both banks achieved their 2011 targets. The Head of the Credit Review Office (CRO), Mr John Trethowan, stated in his recently published ninth quarterly report that "€3.5bn of sanctions for each bank is a very challenging target, however the remaining five months typically show more lending activity and I am of the view that, after a slow start to the year, the targets will be a challenge but still may be achieved." As the Deputy may be aware, one of the key priorities of the Programme for Government is to ensure that an adequate pool of credit is available to fund SMEs in the real economy during the restructuring and downsizing programme. The Economic Management Council meets the banks on a regular basis and discusses the key issues pertaining to this priority.

The banks have not been requested to report to my Department on the specific breakdown between new and increased lending. The important thing from a policy perspective is whether the additional credit is available to the SME customer, not whether they are a new or existing customer. I should say that this information would be commercially sensitive and I would not be able to release it to the Deputy even if it was to hand.

Mr. Trethowan in his ninth report provided information on what is included in the figures reported to the CRO and my Department. This report is available at http://www.creditreview.ie/Publications.aspx.

He says that Loan Sanctions i.e. total amount made available includes

“(i) Loans sanctioned but not yet drawn or utilised e.g. overdrafts are typically only @40% utilized, (ii) contingent liabilities? to support trade, such as letters of credit for exporters and performance bonds for certain contracts. These only become drawn balances if the transaction defaults, (iii) restructuring activities without which many more businesses would have failed”. Therefore a new facility would be included as new lending.

It is vital that the banks continue to make credit available to support economic recovery and I would advise any SME who is refused credit to seek an internal review and go to the Credit Review Office if necessary. However, it is not in the interest of the banks, businesses or the economy for finance to be provided unless the business is viable and has the capacity to meet the interest payments and repay the sum borrowed.

State Banking Sector

Questions (76)

Gerry Adams

Question:

76. Deputy Gerry Adams asked the Minister for Finance the total number of apartment units located here either owned or securities for loans that have been sold by AIB, Bank of Ireland, INBS, Anglo or the National Asset Management Agency since 2010; if he will detail the total number of apartment units located here either owned or securities for loans in the non-core sections of AIB, Bank of Ireland and Permanent TSB; if the total number of apartment units located here either owned or securities for loans in Irish Bank Resolution Corporation and NAMA; and if he will make a statement on the matter. [53221/12]

Written answers

Minister for Finance

I set out below the responses I have received in relation to the Deputy's query:-

Bank Of Ireland

Bank of Ireland gives significant and comprehensive disclosure on its Retail Ireland Residential Mortgage portfolio, including disposals, in pages 107-117 of its Interim Report for the Six months to 30 June 2012, and gives further significant and comprehensive disclosure on its asset quality, including in connection with Retail Ireland residential mortgages, in pages 25-29 of this Interim Report. Bank of Ireland confirms, per the European Commission’s published decisions regarding the State Aid given to Bank of Ireland that Irish mortgages fall within our core portfolio.

Bank of Ireland does not provide disclosures in the areas requested other than as set out above.

PTSB

Permanent TSB has 13,111 loans outstanding on apartment units in Ireland as at the end October 2012. All of these apartment units are in the core section of the bank. If Permanent TSB is approved for full separation into an Asset Management Unit and Permanent TSB, a number of loans will be transferred into the Asset Management Unit, including some of those on apartment units. These loans have yet to be chosen.

IBRC

I have been advised that IBRC is not in a position to respond to questions relating to its loans or other asset levels between its financial reporting dates, as these matters have a market dimension that is commercially sensitive. The Bank’s annual and interim reports provide transparency around the Bank’s loan and asset inventory position at those dates which provides a variety of perspectives on these areas.

AIB

AIB makes detailed disclosures in respect of its mortgage book on a semi-annual basis as part of its regulatory reporting requirements. The mortgage book data is shown on an aggregate basis and also split by owner occupier and buy-to-let. AIB has not historically made disclosures in respect of a sub class of apartments.

The relevant data in respect of AIB’s mortgage books as of June 2012 can be found on page 35 of AIB’s Half Yearly Financial Report 2012 and for year end 2010 and 2011 on page 117 of AIB’s 2011 Annual Financial Report. Data prior to December 2010 has not historically been disclosed in AIB’s accounts.

NAMA

NAMA estimates, at this stage in its analysis, that its Irish residential property portfolio includes some 8,400 completed apartment units. NAMA advises that of this total, approximately 6,500 apartments are currently being rented and that 230 have been sold to date.

NAMA advises that these figures reflect the relative strength of the rental market for apartments in the main urban areas in which NAMA debtor and receiver properties are concentrated. NAMA advises that its strategy in the apartment market is aimed at maximising income. Current demand is for apartment rental rather than purchase. Since inception NAMA has, through its debtors and receivers, secured tenants for approximately 4,000 previously vacant apartments in Ireland. NAMA further advises that it is currently generating over €100 million per annum in recurring rental income receipts from residential assets controlled by its debtors and receivers in Ireland.

State Banking Sector

Questions (77)

Gerry Adams

Question:

77. Deputy Gerry Adams asked the Minister for Finance the total number of owner occupier loans for apartment units located here in AIB, Bank of Ireland, Permanent TSB, and Irish Bank Resolution Corporation; if the total number of owner occupier loans located here for apartment units that are currently in arrears in AIB, Bank of Ireland, Permanent TSB and IBRC; if he will detail the total number of apartment units located here included in buy to let loans in AIB, Bank of Ireland, Permanent TSB and IBRC; if the total number of apartment units located here included in buy to let loans which are in arrears in AIB, Bank of Ireland, Permanent TSB and IBRC; and if he will make a statement on the matter. [53222/12]

Written answers

Minister for Finance

I set out below the responses I have received in relation to the Deputy's query:-

Bank of Ireland

Bank of Ireland gives significant and comprehensive disclosure on its Retail Ireland Residential Mortgage portfolio, including disposals, in pages 107-117 of its Interim Report for the Six months to 30 June 2012, and gives further significant and comprehensive disclosure on its asset quality, including in connection with Retail Ireland residential mortgages, in pages 25-29 of this Interim Report. Bank of Ireland confirms, per the European Commission’s published decisions regarding the State Aid given to Bank of Ireland that Irish mortgages fall within our core portfolio.

Bank of Ireland does not provide disclosures in the areas requested other than as set out above.

IBRC

I have been advised that IBRC is not in a position to respond to questions relating to its loans or other asset levels between its financial reporting dates, as these matters have a market dimension that is commercially sensitive. The Bank’s annual and interim reports provide transparency around the Bank’s loan and asset inventory position at those dates which provides a variety of perspectives on these areas.

AIB

AIB makes detailed disclosures in respect of its mortgage book on a semi-annual basis as part of its regulatory reporting requirements. The mortgage book data is shown on an aggregate basis and also split by owner occupier and buy-to-let. AIB has not historically made disclosures in respect of a sub class of apartments.

The relevant data in respect of AIB’s Republic of Ireland residential mortgage book as of June 2012 can be found on page 30 - 32 of AIB’s Half Yearly Financial Report 2012.

PTSB

Please see the below table for a breakdown of our loan portfolio as it relates to apartment units

New days in arrears brands	No Accounts	Balance €m
Up to date	5,452	1,051
< 90 Days in Arrears	332	72
> 90 Days in Arrears	787	177
Home Loan Apartments Total	6,571	1,301
Up to date	4,780	1,486
< 90 Days in Arrears	337	129
> 90 Days in Arrears	1,423	734
RIP Apartments Total	6,540	2,348
Total Residential (Apartments)	13,111	3,649

Banks Recapitalisation

Questions (78)

Gerry Adams

Question:

78. Deputy Gerry Adams asked the Minister for Finance further to Parliamentary Question No. 240 of 13 November 2012 if he will confirm the reason he has not sought either voluntary or involuntary write downs from Fir Tree on their subordinated debt holdings of Anglo which are costing the taxpayer interest payments every quarter and will cost taxpayer $200 million by 2017; if he will confirm if Irish Bank Resolution Corporation management has sought voluntary write downs from Fir Tree on their subordinated debt holdings of Anglo and if not if he will consider directing IBRC management to seek voluntary write downs from Fir Tree on their subordinated debt holdings; and if he will make a statement on the matter. [53223/12]

Written answers

Minister for Finance

I have been advised that Fir Tree was invited to participate in IBRC’s liability management exercise in 2010 to take a voluntary loss. However, Fir Tree opted not to participate. If write down opportunities present themselves, they will be considered by the Bank. I have not invited Fir Tree directly or indirectly to take voluntary losses on its subordinated notes. IBRC has a contractual obligation to pay interest and principal on the notes.

European Investment Bank Loans

Questions (79)

Thomas P. Broughan

Question:

79. Deputy Thomas P. Broughan asked the Minister for Finance if he is engaging with the European Investment Bank; if he will report on the matters on which he is engaging with the EIB; and if he will make a statement on the matter. [53226/12]

Written answers

Minister for Finance

The EIB is currently providing loan funding for a number of major capital projects. These include EUR 100 million to part-fund the 2012 Exchequer Schools Programme; EUR 50m for the Third Schools Bundle PPP project for 8 schools and which was signed on 9th November and EUR 75m for the N11-N7 Motorway link. There has been continued close engagement with the EIB since President Werner Hoyer’s visit in July when he met with the Taoiseach as well as the Minister for Public Expenditure and Reform and myself. This visit led to the establishment of a Joint High-Level Working Group between my Department and the EIB to enable close collaboration on projects aimed at expanding the Irish economy and supporting growth.

These discussions have culminated in the announcement today of EUR 375m in part-funding for various projects, as follows:

(i) Irish Water Investment Programme (Dept of Environment, Community and Local Government) - EUR 60m

(ii) Bord Gais onshore wind farms EUR 155m

(iii) SME/midcaps Financing for AIB - EUR 100m

(iv) Risk Sharing Instrument (RSI) for SME/midcaps in innovative sectors of the economy EUR AIB EUR 60m.

I recently met with President Hoyer on the margins of ECOFIN, where it was agreed to progress a number of other projects across several sectors during the coming months. Apart from opportunities for investment in traditional sectors such as roads and school-building, I am anxious to explore possibilities in areas such as green energy and innovation.

In relation to capital investment projects, the Department of Public Expenditure and Reform has a role in terms of setting the overall capital investment framework and the basic principles to be observed for the appraisal, assessment, procurement and evaluation of projects. Individual Ministers are responsible for projects and programmes in their areas, within that overall framework. Decisions on the funding arrangements for those projects are primarily the responsibility of individual Departments, in consultation with the National Development Finance Agency. Details about the funding arrangements for individual projects can be obtained directly from the relevant Department.

Promissory Note Negotiations

Questions (80)

Thomas P. Broughan

Question:

80. Deputy Thomas P. Broughan asked the Minister for Finance the total current projections for 2013 for promissory notes payments and interest and national debt amounts and Interest resulting directly from the banking recapitalisation costs under the blanket bailout guarantees; and if he will make a statement on the matter. [53240/12]

Written answers

Minister for Finance

The fiscal forecasts for 2013 set out in the recently published Medium-Term Fiscal Statement (MTFS) assume a €3,060 million cash payment from the Exchequer in respect of the IBRC Promissory Note next year. Similarly, the forecasts also assume a €25 million cash payment in respect of the EBS Promissory Note next year. These payments are part of the estimate of Exchequer non-voted capital expenditure, as set out in table 3.3 on page 26 of the MTFS. The Deputy should also be aware that tables 4a and 4b on pages 92 and 93 respectively of the MTFS show the current schedule with regard to Promissory Note payments out to 2031 as well as the impact on the General Government Balance (GGB) of the initial principal sum of €30.85 billion and accrued interest. The 2013 GGB forecast, as per the MTFS, of -7.5 per cent of GDP makes allowance for some €1.9 billion or 1.1 per cent of GDP in accrued interest on the Promissory Notes in 2013. This has a significant negative impact on the GGB next year.

National debt stood at €136.8 billion at end-October 2012. As regards payments for banking recapitalisation which affected the National debt, the following is the position:

- In 2009, the Exchequer injected €4 billion into Anglo Irish Bank.

- In 2010, the Exchequer provided, by way of Special Investment Shares (SIS), €625 million to EBS and a further €100 million to INBS.

- In 2011, the Exchequer funded the first of the Promissory Notes payments to IBRC (formerly Anglo Irish Bank and INBS) and EBS. These amounted to €3,060 million and €25 million respectively. The Exchequer also provided a net €6.5 billion towards the recapitalisation of Allied Irish Banks, Bank of Ireland and Irish Life and Permanent (ILP) in July 2011.

- In 2012, the Exchequer funded the second €25 million instalment of the EBS Promissory Note. It also funded the €1.3 billion acquisition of Irish Life Limited from ILP. Finally the bond issued to settle the 2012 IBRC Promissory Note also added to National debt this year.

Table 4.2 on page 35 of the MTFS sets out the latest projections for national debt interest expenditure in 2013. As regards interest resulting from banking recapitalisation costs, it is generally the case that no specific tranches of borrowing were undertaken solely for the purpose of recapitalising the banking sector. Therefore it is not possible to accurately quantify that part of national debt interest that relates to borrowing undertaken to recapitalise the banks. The Deputy should be aware that the Exchequer is funded by tax revenue, non-tax revenue and capital resources as well as by borrowings.

NAMA Debtor Agreements

Questions (81)

Maureen O'Sullivan

Question:

81. Deputy Maureen O'Sullivan asked the Minister for Finance if the National Assets Management Agency debtors in receipt of retainers from NAMA also have pension entitlements either within the retainer or in addition to the retainer; and if he will make a statement on the matter. [53290/12]

Written answers

Minister for Finance

I am advised by NAMA that a debtor may, in certain circumstances, be permitted to be remunerated at an agreed level from his income producing assets or business. NAMA advises that it is a matter for the debtor to decide how he apportions this income allocation.

State Banking Sector Regulation

Questions (82)

Ciaran Lynch

Question:

82. Deputy Ciarán Lynch asked the Minister for Finance with regard to the covered institutions, the number of claims made by customers alleging overcharging on personal and commercial loans since the guarantee was put in place; the number and percentage of such claims that succeeded; the amount of payments in tens of thousands; and if he will make a statement on the matter. [53293/12]

Written answers

Minister for Finance

Unfortunately it is not possible to supply the information which the Deputy has requested at this time. The production of this data is a time consuming task for certain of the covered institutions and the collection of the data has not yet been completed by them. I will write to the Deputy as soon as I am in a position to do so.

Ministerial Advisers Remuneration

Questions (83)

Finian McGrath

Question:

83. Deputy Finian McGrath asked the Minister for Finance the total number of Government special advisers employed in his Department; the total cost of employing these advisers and the cost of employing these advisers; and if he will make a statement on the matter. [53312/12]

Written answers

Minister for Finance

In my Department, I have appointed Mary Kenny and Eoin Dorgan as special advisors. The salary for both special advisors is €86,604 per annum.