Financial Services Regulation

Questions (181)

Michael McGrath

Question:

181. Deputy Michael McGrath asked the Minister for Finance if he will set out in tabular form the balance held at year end for each year from 2007 to 2012 in the deposit protection account at the Central Bank of Ireland which will be used to fund any deposit guarantee scheme pay-out; the number of occasions on which payments have been made from this account since its inception to compensate savers; the amount involved; his plans to review the operation of the account following the liquidation of Irish Bank Resolution Corporation; and if he will make a statement on the matter. [9589/13]

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Written answers (Question to Finance)

Table

DPA Balances

Year End

Banks

Credit Union

Total

2012

379,390,200.00

23,633,580.57

403,023,780.57

2011

434,740,900.00

0

434,740,900.00

2010

537,900,500.00

0

537,900,500.00

2009

608,262,200.00

0

608,262,200.00

2008

669,408,300.00

0

669,408,300.00

2007

526,093,100.00

0

526,093,100.00

The operation of the Deposit Protection Account is governed under European Communities (Deposit Guarantee Scheme) Regulations 1995 (SI No. 168 of 1995).

The table above shows the balance held at year-end in the Deposit Protection Account (DPA) at the Central Bank of Ireland. Each deposit-holding institution is required to maintain a balance on their DPA account of 0.2% of their total deposits (with a minimum amount of €50,000 in the case of all institutions except credit unions). This percentage is calculated annually in December. Interest is paid by the Central Bank on the DPA balances (1). The decline in the DPA balance reflects the drop in deposits in Irish credit institutions.

The IBRC liquidation event is the first occasion on which payment will be made from this account.

IBRC held a balance of €1.3 million in their DPA account at the date of liquidation. This amount will be used in the first instance to fund the DGS pay-out, before the DPA accounts of other institutions are required to provide funds for this event. The cost of the DGS pay-out will be charged against the deposit of each credit institution in proportion to their share of the total balance on the DPA.

The final cost of pay-out will not be known until the Special Liquidators have completed their investigations in the next few weeks.

After the pay-out in respect of the IBRC liquidation event, the Central Bank of Ireland will become an unsecured creditor of IBRC (in liquidation) in respect of the amount paid out under the scheme. If the Central Bank does not secure payment from IBRC (in liquidation) in respect of this unsecured debt, all other contributing institutions will be required to replenish their deposits in the DPA by end 2013, to meet their obligation to hold a DPA balance of 0.2% of total deposits.

1. Section 4 of the Financial Services (Deposit Guarantee Scheme) Act 2009 for credit unions provides that from 30 November 2012, each credit union will be required to maintain in the Deposit Protection Account at the Central Bank of Ireland, an amount equal to 0.2% of the deposits and shares held on behalf of members.

Government Bonds

Questions (182, 194)

Michael McGrath

Question:

182. Deputy Michael McGrath asked the Minister for Finance his views of what constitutes conditions of financial stability in respect of the timetable for the sale by the Central Bank of Ireland of Irish Government bonds it has acquired as a result of the revised promissory note; and if he will make a statement on the matter. [9590/13]

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Pearse Doherty

Question:

194. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question No. 56 of 13 February 2013, if he will confirm what he means by conditions of financial stability; if such conditions exist today and, if not, by reference to what metric will he judge when such conditions have been met, and specifically if there is an interest rate metric by reference to which these bonds will not be diosposed of on the sovereign bond market. [9752/13]

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Written answers (Question to Finance)

I propose to take Questions Nos. 182 and 194 together.

The Government bonds are now held by the Central Bank of Ireland following the liquidation of IBRC.

Eight new Floating Rate Treasury Bonds have been issued to discharge the Promissory Notes liability consisting of:

- a 25 year bond of €2bn maturing in 2038 with an interest rate of 6-month Euribor plus a margin of 2.50%;

- a 28 year bond of €2bn maturing in 2041 with an interest rate of 6-month Euribor plus a margin of 2.53%;

- a 30 year bond of €2bn maturing in 2043 with an interest rate of 6-month Euribor plus a margin of 2.57%;

- a 32 year bond of €3bn maturing in 2045 with an interest rate of 6-month Euribor plus a margin of 2.60%;

- a 34 year bond of €3bn maturing in 2047 with an interest rate of 6-month Euribor plus a margin of 2.62%;

- a 36 year bond of €3bn maturing in 2049 with an interest rate of 6-month Euribor plus a margin of 2.65%;

- a 38 year bond of €5bn maturing in 2051 with an interest rate of 6-month Euribor plus a margin of 2.67%; and

- a 40 year bond of €5bn maturing in 2053 with an interest rate of 6-month Euribor plus a margin of 2.68%.

The bonds will pay interest every six months (June and December).

The Central Bank of Ireland will sell the bonds but only where such a sale is not disruptive to financial stability. The Central Bank have undertaken that a minimum of bonds will be sold in accordance with the following schedule: €0.5bn by the end of 2014, €0.5bn per annum from 2015 to 2018, €1bn per annum from 2019 to 2023 and €2bn per annum from 2024 onwards.

The Central Bank of Ireland is responsible for financial stability considerations. I would expect the Central Bank to take full account of the health of the domestic and international banking system, the global economic situation and developments in markets when considering financial stability considerations in relation to the disposal of these Irish government bonds.

Promissory Note Negotiations

Questions (183)

Colm Keaveney

Question:

183. Deputy Colm Keaveney asked the Minister for Finance if he agrees with the estimate of the value of the savings achieved by the deal announced on 8 February 2013 with the liquidation of the Irish Bank Resolution Corporation and the conversion of promissory notes to longer-term sovereign bonds as being €7.9 billion, as estimated by an economist (details supplied); if not, if he will provide his own estimate, taking into account the total interest payable and the net present value of both the original promissory notes and the now sovereign bonds; and if he will make a statement on the matter. [9616/13]

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Written answers (Question to Finance)

As the Deputy will know, the Promissory Notes were replaced with a portfolio of long term non-amortising Irish Government bonds as a result of undertaking the transaction earlier this month. With regard to the net present value gain in this arrangement, as the Deputy is aware, the calculation of a net present value is based on a number of mathematical assumptions, including what discount rate to apply and assumptions around future refinancing rates, all of which will depend upon the outcome of future events. These assumptions can have a material impact on the ultimate valuation and it is subject to a wide range of possible outcomes. For that reason, the Department did not produce a net present value figure for publication and I am not in a position to give one now. I can assure the Deputy that a key determinant of the value of the new arrangement was debt sustainability.

International Summits

Questions (184)

Colm Keaveney

Question:

184. Deputy Colm Keaveney asked the Minister for Finance the details of all bilateral meetings held between himself and any other individual or group at the recent annual meeting of the World Economic Forum, Davos, Switzerland, including the identity of all such groups or individuals; the purpose of each meeting; and if he will make a statement on the matter. [9622/13]

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Written answers (Question to Finance)

I travelled to Davos, Switzerland, to attend the annual meeting of the World Economic Forum, from 23 to 25 January. The World Economic Forum annual meeting is attended by political and business leaders and heads of international organisations. The theme of this year's meeting was 'Resilient Dynamism'.

While in Davos I held bilaterals with a number of my counterparts and with leaders of several major multinational firms. I used this opportunity to set out Ireland's EU Presidency priorities and to promote Ireland as a location for international business and investment.

Government Bonds

Questions (185)

Colm Keaveney

Question:

185. Deputy Colm Keaveney asked the Minister for Finance if it is possible for the European Central Bank, acting unilaterally, to direct the Central Bank of Ireland to dispose of the long term Irish bonds created to replace the promissory notes following the dissolution of the Irish Bank Resolution Corporation onto the private market; and if he will make a statement on the matter. [9627/13]

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Written answers (Question to Finance)

The Government bonds now held by the Central Bank following the liquidation of IBRC will be placed in the trading portfolio of the Central Bank, and these bonds will be sold as soon as possible, provided conditions of financial stability permit. The Central Bank of Ireland is responsible for financial stability considerations. I would expect the Central Bank to take full account of the health of the domestic and international banking system, the global economic situation and developments in markets when considering financial stability considerations in relation to the disposal of these Irish government bonds. The Central Bank has undertaken that a minimum of bonds will be sold in accordance with the following schedule: €0.5bn by the end of 2014, €0.5bn per annum from 2015 to 2018, €1bn per annum from 2019 to 2023 and €2bn per annum from 2024 onwards.

Tax Reliefs Application

Questions (186)

Pearse Doherty

Question:

186. Deputy Pearse Doherty asked the Minister for Finance if he will provide an update on the operation of the SARP tax relief passed in Budget 2012, including the number of persons who have availed of this tax relief; the total amount of relief awarded and the number of jobs that have been directly created as a result of this relief. [9744/13]

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Written answers (Question to Finance)

Section 14 of Finance Act 2012 introduced the Special Assignee Relief Programme which is designed to reduce the cost to employers of assigning key individuals in their companies from abroad to take up positions in the Irish based operations of their employer. Paragraph 10 of Section 14 provides that relevant employers must submit an annual return to the Revenue Commissioners detailing, inter alia, the number of employees and the amounts of exempt income claimed under the programme. This return was not sought until after the end of the tax year 2012 in order to ensure that an accurate picture of take up levels over a full tax year could be provided. Therefore, given that 2012 is the first year of the programme, reliable statistics on its uptake will not be available until later this year.

IBRC Liquidation

Questions (187)

Pearse Doherty

Question:

187. Deputy Pearse Doherty asked the Minister for Finance in relation to Irish Bank Resolution Corporation, the par value, impairment provision and book value of loans at 31 December 2012, 31 January 2013 and 6 February, 2013. [9745/13]

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Written answers (Question to Finance)

I am advised that the information requested is commercially sensitive and it would not be appropriate for the special liquidator to release information outside of that already published in IBRC’s Accounts. Detailed information in relation to the Bank’s financial performance, including information on provisioning, is published in the Bank’s interim report and annual report and accounts. The most recent information can be found in the Bank’s Interim Report 2012, page 72. It is Bank policy not to publish any additional confidential commercially sensitive financial information which could potentially have a detrimental impact on asset recovery in the impending sale process.

IBRC Liquidation

Questions (188, 189)

Pearse Doherty

Question:

188. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question No. 60 of 13 February 2013, the reason only €123m of €323m of deposits in Irish Bank Resolution Corporation on 31 January 2013 are at risk of loss. [9746/13]

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Pearse Doherty

Question:

189. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question 60 of 13 February 2013, if he will outline the types of deposit that comprise the €123m of deposits that are at risk of loss, and if any Irish credit unions are amongst the depositors whose deposits are at risk. [9747/13]

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Written answers (Question to Finance)

I propose to take Questions Nos. 188 and 189 together.

I have been advised that the previous PQ No. 60 of 13 February 2013 does not refer to only €123m of €323m of deposits being at risk of loss. It refers to €123m as being the estimated level of deposits eligible under Deposit Guarantee Scheme (DGS). The remaining deposits are considered as ineligible under DGS; a portion of these deposits will be covered by the Eligible Liabilities Guarantee (ELG) Scheme. As payments under the ELG Scheme are on the basis of claims submitted to the NTMA as operators of the Scheme it is too early for me to confirm how much will eventually be paid out under the Scheme as a result of the liquidation.

In relation to Irish Credit Unions, I am advised by the Central Bank of Ireland that certain tracker bonds sold to Credit Unions which were liabilities of IBRC at the time of the liquidation have a structured deposit element which is covered by the Deposit Guarantee Scheme but fall outside the eligibility criteria for the ELG Scheme due to the nature of the investment product concerned. Unfortunately, if a deposit is not eligible under the ELG scheme the depositor will rank as an unsecured creditor in the liquidation. I am advised that this may impact a small number of Credit Unions.

The individual Credit Unions affected and the Irish League of Credit Unions have been in contact with the Special Liquidator in relation to this matter. It should be noted that the Government has already provided €500 million of taxpayers’ money to support the stability of credit unions through resolution and restructuring. In addition, the Credit Union movement has its own stabilisation fund.

Financial Services Regulation

Questions (190, 191)

Pearse Doherty

Question:

190. Deputy Pearse Doherty asked the Minister for Finance the total held in deposits by Anglo Irish Bank and Irish Nationwide Building Society on 1 October 2010; the total held in deposits in Anglo Irish Bank and Irish Nationwide Building Society on 1 October 2010 not covered by the eligible liabilities guarantee; the charge to the Deposit Guarantee Scheme if Anglo Irish Bank and Irish Nationwide Building Society were liquidated on 1 October 2010. [9748/13]

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Pearse Doherty

Question:

191. Deputy Pearse Doherty asked the Minister for Finance the total of unguaranteed unsecured senior bonds in Anglo Irish Bank and Irish Nationwide Building Society on 1 October 2010. [9749/13]

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Written answers (Question to Finance)

I propose to take Questions Nos. 190 and 191 together.

Unfortunately my Department has been unable to obtain the information requested by the Deputy in the time available. I will write to the Deputy directly with the information as soon as it becomes available.

IBRC Liquidation

Questions (192)

Pearse Doherty

Question:

192. Deputy Pearse Doherty asked the Minister for Finance in relation to Irish Bank Resolution Corporation, the way the special liquidator will obtain independent valuations of IBRC’s loans; when such valuations will be undertaken and completed; the identity of the party or parties undertaking the valuation; the methodology to be used and the cost of the independent valuations. [9750/13]

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Written answers (Question to Finance)

I am advised by IBRC that request for proposals ("RFPs") have now been sent out to potential advisors in respect of the first tranche of assets for valuation. Successful applicants will be appointed to provide independent valuations for each loan or connection in the portfolios. This loan valuation process is expected to commence in early March and be completed by late June. As advisors are yet to be identified/engaged for all portfolios the special liquidators are not in a position to comment on the methodology to be used by the advisors and the cost of the independent valuations.

IBRC Liquidation

Question No. 194 answered with Question No. 182.

Questions (193)

Pearse Doherty

Question:

193. Deputy Pearse Doherty asked the Minister for Finance in relation to Irish Bank Resolution Corporation, the way the special liquidator will ensure all loan sales are conducted in an open and transparent fashion so that potential buyers will be able to obtain adequate information and have sufficient time to assemble financing and in general, the way the special liquidator will ensure that the sales price obtained represents the optimum value for the taxpayer. [9751/13]

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Written answers (Question to Finance)

There is an obligation on the Special Liquidators to ensure that the assets of IBRC are sold at a price which maximises the overall return for all its creditors including the State. I am advised that the special liquidators are still in the process of devising and implementing a sales process in respect of IBRC’s assets and are therefore not in a position to comment in detail at this time. However, it should be noted that there is an obligation on the special liquidators to ensure that assets of IBRC are sold at a price that is equal to or in excess of the independent valuations that are to be obtained and that this will be done in an open and transparent manner.

Question No. 194 answered with Question No. 182.

IBRC Liquidation

Questions (195, 196, 197)

Pearse Doherty

Question:

195. Deputy Pearse Doherty asked the Minister for Finance if he will outline any restrictions on activities of the former chief executive officer of Irish Bank Resolution Corporation during the period of the IBRC liquidation. [9753/13]

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Pearse Doherty

Question:

196. Deputy Pearse Doherty asked the Minister for Finance if the former chief executive officer of Irish Bank Resolution Corporation is precluded from advising potential buyers of IBRC assets during the period of the IBRC liquidation. [9754/13]

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Pearse Doherty

Question:

197. Deputy Pearse Doherty asked the Minister for Finance the confidentiality restraints that apply to the former chief executive officer of Irish Bank Resolution Corporation. [9755/13]

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Written answers (Question to Finance)

I propose to take Questions Nos. 195 to 197, inclusive, together.

The special liquidators have confirmed that there are restrictive covenants and confidentiality provisions included in the employment contract of the former CEO of IBRC. The special liquidators have confirmed that the former CEO owes a common law duty of confidentiality that continues following the termination of his employment with IBRC, such that he is restricted from using confidential information obtained during the course of his employment to the detriment of IBRC.

In addition Ethic in Public Office Acts applies to former executives and other office holders in the IBRC including the former CEO. This Act requires that former office holders should act in a way which ensures an unfair advantage would not be conferred in a new appointment, by virtue of for example, access to official information the office holder previously enjoyed.

Small and Medium Enterprises Supports

Questions (198, 199, 200)

Pearse Doherty

Question:

198. Deputy Pearse Doherty asked the Minister for Finance further to the announcement on 8 January 2013 by the National Treasury Management Agency, if he will confirm the volume and value of applications received by a company (details supplied) in respect of the €300-350m equity fund; the volume and value of applications approved; and if he will make a statement on the matter. [9756/13]

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Pearse Doherty

Question:

199. Deputy Pearse Doherty asked the Minister for Finance further to the announcement on 8 January, 2013 by the National Treasury Management Agency, if he will confirm the volume and value of applications received by a company (details supplied) in respect of the €100m equity fund; the volume and value of applications approved; and if he will make a statement on the matter. [9757/13]

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Pearse Doherty

Question:

200. Deputy Pearse Doherty asked the Minister for Finance further to the announcement on 8 January, 2013 by the National Treasury Management Agency, if he will confirm the volume and value of applications received by a company (details supplied) in respect of the €100m equity fund; the volume and value of applications approved; and if he will make a statement on the matter. [9758/13]

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Written answers (Question to Finance)

I propose to take Questions Nos. 198 to 200, inclusive, together.

I am informed by the National Treasury Management Agency, as Manager of the National Pensions Reserve Fund (NPRF), that the announcement in January 2013 of the three new SME funds to provide equity, credit and restructuring/recovery investment has been received well in the market place. The NPRF has completed commitments of €125 million to the SME Equity Fund managed by Carlyle Cardinal Ireland and €50 million to the SME Turnaround Fund managed by Better Capital Fund and the managers of these funds have recently commenced actively seeking appropriate investments. The SME and Mid-Corporate Credit Fund to be managed by BlueBay is currently being prepared for its launch, which is expected in the second quarter of 2013.

The details of individual investments made by the Funds in question are commercially sensitive and, as a commercial investor, the NPRF is subject to confidentiality provisions in the various fund formation agreements. The NPRF intends to publish a report regarding the investments made under the Strategic Investment Fund programme, including information along the lines requested, on an aggregate basis in July and January each year, commencing in July 2013. Announcements in respect of specific developments in relation to each of these Funds will be made available on the NPRF website as they arise.

Banks Recapitalisation

Questions (201)

Pearse Doherty

Question:

201. Deputy Pearse Doherty asked the Minister for Finance further to the announcement on 25 July 2011, of the sale of a 35% stake in Bank of Ireland to a group of North American investors for a price of up to €1.123bn, if he will confirm the sums received to date; the date received, and a schedule of any further payments due. [9765/13]

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Written answers (Question to Finance)

On 25 July 2011, the Minister for Finance announced that a group of investors had committed to buy up to €1.1bn of the NPRF’s shares in Bank of Ireland. This commitment reduced, from €1.9bn to €0.8bn (58% reduction), the potential maximum cost for the State to meet the bank’s PCAR equity capital requirement. As a result of investment from other non-Government sources, the total cost to the State (through the NPRF) from underwriting the bank’s equity capital raise reduced from €0.8bn to €0.2bn (including net underwriting fees received by the NPRF of €0.05bn). The actual amount sold by the NPRF to the investors was 10.5bn Bank of Ireland shares at a price of 10c per share. The disposal of these shares took place in two tranches. The first disposal for €0.24bn settled on 2 August 2011 with the second, and final, tranche for €0.81bn settling on 17 October 2011.

The net proceeds from the disposals were transferred, on foot of a Ministerial Direction, from the NPRF to the Exchequer within 5 days of receipt from the investors.

There are no further payments due.

Credit Unions

Questions (202)

Pearse Doherty

Question:

202. Deputy Pearse Doherty asked the Minister for Finance if credit unions are part of the eligible depositors who will be burnt as a result of the Irish Bank Resolution Corporation Act; and the steps he is taking to assist credit unions in this eventuality. [9823/13]

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Written answers (Question to Finance)

I am advised by the Central Bank of Ireland that certain tracker bonds sold to credit unions which were liabilities of IBRC at the time of the liquidation have a structured deposit element which is covered by the Deposit Guarantee Scheme for that element of the product. As a result the first €100,000 of any claim from these depositors is covered under the DGS Scheme. The bond itself is not covered by the ELG scheme as it predates that scheme. Credit unions affected have been advised to deal with the Special Liquidator in relation to this matter.