Tuesday, 26 February 2013

Questions (177)

Éamon Ó Cuív

Question:

177. Deputy Éamon Ó Cuív asked the Minister for Finance the details of all investments made by the State directly or through the National Pensions Reserve Fund in the pillar banks and in Irish Life and Permanent; the current market value of these investments; the estimated value these investments will have in 2018 based on the projected performance of the banks and presuming no sale of these investments in the meantime; and if he will make a statement on the matter. [9555/13]

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Written answers (Question to Finance)

The bank recapitalisation commitments made by the State to date are set out in the following table:

Government preference Shares (2009) - NPRF

3.5

3.5*

-

-

7.0

Capital contributions (with Promissory Notes as consideration) /Special Investment Shares (2010) – Exchequer **

0.9

-

-

30.7

31.6

Ordinary Share Capital (2009) – Exchequer

-

-

-

4.0

4.0

Ordinary Share Capital (2010) - NPRF

3.7

-

-

-

3.7

Total pre-PCAR 2011 (A)

8.1

3.5

0

34.7

46.3

Capital from Exchequer***

3.9

-

4.0

-

7.8

NPRF Capital

8.8

1.2

-

-

10.0

Total PCAR (B)

12.7

1.2

4.0

-

17.8

Total Cost of Recap for State (A) + (B)

20.7

4.7

4.0

34.7

64.1

* €1.7bn of BoI’s government preference shares were converted to equity in May/June 2010 (€1.8bn still left in existence). The government also received €0.5bn from the warrants relating to BoI’s preference shares (excluded from table above). In addition the State received €1.1bn stock coupons from BoI and AIB relating to the Government Preference shares.

** The IBRC amount is made up of a total capital contribution for Anglo / INBS of €30.6bn and a special investment share of €0.1bn (INBS). The Anglo / INBS capital contribution impacted in full on the GGB in 2010. The consideration for the Anglo / INBS capital contribution was €30.6bn of promissory notes. These Promissory Notes are an amount due from the State to IBRC. Each year, on 31 March, €3.06bn is paid by the Exchequer to Anglo / INBS as part of the scheduled repayments of the promissory notes. The first such repayment was made on 31 March 2010.

*** The Exchequer cost of the 2011 BoI recap is shown net of share sale to private investors (Completed in October, 2011)

As the Deputy will be aware, the State successfully disposed of the €1.0 billion Contingent Capital instruments in BoI recently and last week announced the sale of Irish Life and Permanent to Great West Life Company for €1.3bn.

Unfortunately it is not possible for me to say at this time what value the remaining banking assets would be worth in 2018. This will depend on many factors over the coming years, including macro-economic variables and the performance of the domestic economy.

However, on the 19th July 2012 the NPRF published their annual report. This contained a valuation of the NPRF’s ordinary and preference shareholdings in Bank of Ireland and Allied Irish Bank at 31st December 2011. As at the 31st December the NPRF valuation of its investments in Irish banks stood at €8 billion. Its investments in AIB at this date were valued at €6.1bn comprising preference shares of €2.2bn and ordinary shares of €3.9bn. Its investments in Bank of Ireland were valued at €1.9bn consisting of preference shares of €1.5bn and ordinary shares valued at €0.4bn.

In addition, the State holds direct equity investments in ptsb (now separated from Irish Life). The State also has €2bn in contingent capital instruments remaining in AIB and ptsb which are scheduled to be repaid to the State in 2016.