Dáil Éireann Debate, Wednesday - 16 January 2013
201. Deputy Michael McGrath asked the Minister for Finance the amount of contingent convertible capital notes and preference shares the State holds in the covered banks; the dates on which these were acquired; the interest payable on each security; their maturity dates; his plans for these investments; and if he will make a statement on the matter. [1873/13]
View answerThe State’s investment in the contingent convertible capital notes of AIB, Bank of Ireland and PTSB dates back to the 2011 PCAR exercise while the preference shares were acquired in 2009 as a result of the Government’s recapitalisation of AIB and Bank of Ireland. It is government policy to separate the State from its’ banks, a policy which I believe has shared support in this house. This policy will see the State this year remove the guarantee of bank deposits and liabilities which dates back to September 2008 and it also requires us to exit our bank investments over time and when conditions allow. Information on the holdings of these instruments in each of the covered banks is provided in the following paragraphs.
AIB
The State holds €1.6 billion of contingent convertible capital notes in AIB which were issued on 26 July 2011. The interest payable on these securities is €160 million per annum. The maturity date of this instrument is 28 July 2016. Further information on the terms of these notes can be found in Note 45 of the Annual Financial Report 2011 (Page 340).
The State holds €3.5 billion of preference shares in AIB. These were acquired on 13 May 2009. The interest payable on these securities is €280 million per annum and is payable in cash or ordinary shares in the event of non-payment in cash. AIB issued ordinary shares to the State in lieu of the dividend due on the preference shares in May 2010, May 2011 and May 2012. The principal steps up in 2014 by 25% if not redeemed. Further information on this can be found in Note 46 of the Annual Financial Report 2011 (Page 344).
Permanent TSB
The State holds €0.4 billion of contingent convertible capital notes in Permanent TSB which were issued on 27 July 2011. The interest payable on these securities is €40 million per annum. The maturity date of this instrument is 28 July 2016. Further information on the terms of these notes can be found in Note 32 to the Irish Life and Permanent Group Holdings plc 2011 Annual Report (Page 153).
Bank of Ireland
The State holds €1.8 billion of preference shares in BOI. These were initially acquired on 31 March 2009. The interest payable on these securities is €188 million per annum which is payable in cash or ordinary shares in the event of non-payment in cash. Bank of Ireland issued ordinary shares in lieu of the dividend due on the preference shares to the State in February 2010. The principal steps up in 2014 by 25% if not redeemed. Further information on this can be found in Notes 48 and 50 of the Annual Financial Report 2011 (Pages 273 and 280).
As announced by my Department last week the State has been successful in disposing of its entire €1 billion holding of Contingent Capital Notes (CCN’s) in Bank of Ireland. In the end the book build process generated significant excess demand to enable the State to dispose of its entire holding in the bonds at a price of 101% of their par value plus accrued interest. The transaction settled on Tuesday the 15th of January and the State was paid proceeds of just over €1,056 million, comprising principal of €1,000 million, interest accrued of over €46 million covering the period 29th July 2012 to date, and a profit of €10 million.
