Written Answers Nos. 50-60
51. Deputy Peadar Tóibín asked the Minister for Finance further to his announcement of introducing legislation to give effect to Real Estate Investment Trusts, if he has consulted with the National Asset Management Agency with respect to its planned launch of Qualified Investor Funds; and if NAMA remains committed to launching QIFs in view of his announcement with respect to REITs. [1782/13]
View answerI am advised by NAMA that it is very supportive of the Government’s decision to introduce REITs legislation. Officials in my Department have been in regular contact with the Agency in relation to the introduction of QIFs and I am advised that the Board of NAMA is currently considering its approach in light of the forthcoming REITs legislation.
52. Deputy John McGuinness asked the Minister for Finance if permanent interest rate reductions are actively considered by banks in dealing with distressed mortgage borrowers; and if he will make a statement on the matter. [2024/13]
View answerI, as Minister for Finance, have no statutory role in relation to the mortgage interest rates charged by regulated financial institutions. It is a commercial matter for the banks concerned. The Central Bank has responsibility for the regulation and supervision of financial institutions in terms of consumer protection and prudential requirements and for ensuring ongoing compliance with applicable statutory obligations. The Central Bank has no statutory role in the setting of interest rates by financial institutions, apart from the interest rate cap imposed on the credit union sector in accordance with the provisions of the Credit Union Act, 1997.
The mortgage interest rates that financial institutions operating in Ireland charge to customers are determined as a result of a commercial decision by the institutions concerned. This interest rate is determined taking into account a broad range of factors, including European Central Bank base rates, deposit rates, market funding costs, the competitive environment and an institution’s overall funding.
However, as part of the Central Bank’s work on mortgage arrears, lenders were asked to consider all avenues to help customers in arrears, including interest rate reductions. Currently, several lenders do consider a temporary interest rate reduction but this is on a case by case basis.
53. Deputy Pádraig Mac Lochlainn asked the Minister for Finance further to his announcement of introducing legislation to give effect to Real Estate Investment Trusts, if he will outline the way in which REITs will be regulated here; the persons that will be responsible for regulation and the competencies and qualifications needed for appropriate regulation of REITs. [1781/13]
View answerThe details of the legislation which will provide for Real Estate Investment Trust (REIT) status for qualifying public limited companies will be published in Finance Bill 2013.
An Irish REIT will be subject to relevant provisions of the Companies Acts, and will be required to comply with the requirements of various European Directives including the Prospectus Directive, Transparency Directive, Market Abuse Directive and the Markets in Financial Instruments Directive (MiFID).
56. Deputy Bernard J. Durkan asked the Minister for Finance if he will outline his objectives in the course of Ireland’s Presidency of the EU with particular reference to the need to convince his EU colleagues and institutions regarding the importance of their need to recognise the economic sacrifices made by the Irish people arising from the consequences of the financial bailout which he inherited from his predecessors and the need for a substantial alleviation of this burden in the future, his views on whether progress can be achieved in this regard in the next six months; and if he will make a statement on the matter. [1981/13]
View answerAs President of the ECOFIN Council I will be pursuing the objectives listed in the ECOFIN work programme of the Irish Presidency of the European Union, which will be formally presented to the Ecofin Council on 22 January 2013. As Presidency, our focus will be on seeking agreement with our European partners on
- the legislative measures underpinning the banking union,
- certain other legislative measures in the financial markets and consumer area,
- progressing the European Semester process and seeking agreement on the “two pack” of budgetary surveillance measures,
- making further progress on the development of economic and monetary union and
- progressing a range of direct and indirect taxation dossiers.
Making progress on the banking union proposals is of particular importance, both to Ireland and to the wider EU, as a way of breaking the vicious circle between banks and sovereigns. The Deputy will appreciate that there is a need for the Presidency to remain impartial in order to be able to seek and achieve agreement with European partners on this agenda and it would be inappropriate, and would not be advantageous, to use my position as President of the ECOFIN Council to raise specific national issues.
As regards the issue of inherited financial debt, I would say that this has been, and continues to be, raised in discussions at a political level in Europe and with the relevant European institutions. I would refer the Deputy to public comments made during last week’s visits of the President of the European Council, Herman Van Rompuy and the President of the European Commission, José Barroso.
There is ongoing work with the relevant European institutions on seeking to resolve the specific difficulties with financial institutions. Given the sensitivity of such negotiations it would be unhelpful for me to comment on a possible outcome at this stage.
57. Deputy Jonathan O'Brien asked the Minister for Finance if he has consulted with any investment, auditing and accounting institutions in the drafting of the Finance Bill 2013; if he will make available the advice that he was given in the drafting of the Bill and specify whether that advice was included in the Bill, specifically with regards to business tax, high earners tax and research and development taxation. [1792/13]
View answerAs part of the normal process for Budget 2013, my Department received over 500 Pre-Budget submissions from a variety of sectors including investment, auditing and accounting institutions. This process has continued for Finance Bill 2013, with the Department open to the suggestions from all sectors and bodies including investment, auditing and accounting institutions.
In relation to any individual ‘advice’ that my Department may have received, the process relating to the Finance Bill is still on-going. The Deputy will therefore appreciate that it would not be possible to make such advice available (if it did exist) at this time, as to do so could interfere with the Government’s deliberative process.
58. Deputy Seán Crowe asked the Minister for Finance his views on whether a minimum number of employees should be employed before a company may be established for the purposes of corporation tax; if he will provide an estimate of the number of persons who are currently operating and paying tax as a company; and if he will make a statement on the matter. [1790/13]
View answerIt is not clear from the question what the underlying issue is that the Deputy is referring to. However, a number of features of our corporation tax regime may be relevant here.
In the first instance, there are certain anti-avoidance rules that may apply to company with few members such as the close company surcharges. The close company surcharges apply to Irish resident companies which are controlled by five or fewer participators (shareholders, directors and their associates) or by participators who are all directors. The surcharge is designed to discourage the retention and accumulation of investment and rental income in such companies and is effectively an anti-avoidance measure aimed at countering attempts to avoid personal income tax on passive non-trading income retained within a company.
Further there are 2 rates of corporation tax, one relating to trading income and the other broadly relating to non-trading (or passive) income. The 12.5% corporation tax rate applies only to the trading income of a company. In determining whether or not a trade is being carried out, the presence of employees is one of a number of factors taken into account in determining whether or not the profit arising from a certain activity qualifies for the 12.5% rate. A 25% rate broadly applies to non-trading or passive income.
I am informed by the Revenue Commissioners that while the number of companies that filed corporation tax returns was 124,404 for accounting periods ended in 2010, the latest year for which this information is available, the number of individuals associated with these companies is not identifiable from the returns.
59. Deputy Dessie Ellis asked the Minister for Finance the process undertaken to redeem subordinated and junior bonds at the covered institutions (details supplied); and specifically the way the haircut offers were derived. [1786/13]
View answer60. Deputy Aengus Ó Snodaigh asked the Minister for Finance if he will set out in tabular form by year for 2008, 2009, 2010, 2011 and 2012 for each of the covered institutions (details supplied), the total subordinated and junior bonds repaid including the nominal value of the bonds, the sums actually paid and the haircut representing the difference between the two. [1785/13]
View answerI propose to take Questions Nos. 59 and 60 together.
|
- |
2008 |
2009 |
2010 |
2011 |
2012 |
|
- |
€m |
€m |
€m |
€m |
€m |
|
Total Subordinated and Junior Bonds: |
|||||
|
BoI(1) |
|||||
|
Consideration2 |
600 |
700* |
3,300* |
800* |
N/a |
|
Nominal Value |
600 |
1,700 |
4,700 |
2,300 |
N/a |
|
Average Discount |
0% |
59% |
30% |
65% |
N/a |
|
AIB (incl EBS) |
|||||
|
Consideration |
200 |
1,366 |
1,842 |
1,052 |
N/a |
|
Nominal Value |
200 |
2,470 |
2,377 |
4,882 |
N/a |
|
Average Discount |
0% |
34.97% |
37.80% |
72.58% |
N/a |
|
Permanent TSB |
|||||
|
Consideration |
162 |
N/a |
N/a |
455* |
N/a |
|
Nominal Value |
162 |
N/a |
N/a |
1,459 |
N/a |
|
Average Discount |
0% |
N/a |
N/a |
69% |
N/a |
|
IBRC (incl INBS)3 |
Ended 30 Sep 2008 |
Ended 31 Dec 2009 |
Ended 31 Dec 2010 |
Ended 31 Dec 2011 |
Ended 31 Dec 2012 |
|
Consideration |
72 |
895 |
301 |
34 |
(119)4 |
|
Nominal Value |
102 |
2,784 |
1,890 |
174 |
(119) |
|
Average Discount |
29.4% |
67.8% |
84.1% |
80.5% |
0% *Includes amounts redeemed at par |
1) BOI figures are rounded to their nearest hundred million.
2) Consideration provided as part of the Liability Management Exercises was in the form of cash, equity and other debt instruments.
3) Foreign exchange rates are as at end financial period.
4) On 27 July 2012, the English High Court delivered a judgement granting declaratory relief against IBRC in favour of Assénagon. The effect of the Assénagon judgement is that the redemption of certain dated notes by the Bank during November and December 2010 was invalid and consequently these notes therefore continue in existence on their original terms. The Bank continues to honour quarterly coupon obligations in respect of the notes pending the outcome of the Appeal.
The purpose of the Liability Management Exercise (LME) transactions was to create additional core tier 1 capital and to strengthen the quality of the capital base of the Banks. I understand that these transactions were commercial decisions for the Institutions following consultation with their financial advisors.
