Thursday, 9 May 2013

Written Answers Nos. 43-50

Mortgage Repayments Issues

Questions (43)

Finian McGrath

Question:

43. Deputy Finian McGrath asked the Minister for Finance if he will respond to issues raised in correspondence (details supplied) by the Irish Brokers Association on debt forgiveness. [22057/13]

Written answers

Minister for Finance

I can assure the Deputy that the Government is very aware of the significant difficulties some homeowners are facing in meeting their mortgage obligations and it has put in place a comprehensive strategy to address the problem focusing on four main distinct areas:

- Innovative Personal Insolvency Reform: Personal insolvency reform was identified by the Keane Report as a catalyst for addressing the mortgage arrears problem and it indicated that without an effective insolvency system the mortgage arrears problem will not be resolved. The introduction of the new Personal Insolvency Act provides new statutory insolvency frameworks to allow debtors and creditors reach arrangements on unsustainable mortgage and personal debt. The legislation provides a legal framework for the resolution of mortgage arrears, as well as other personal debt, and it will provide certainty for borrowers and lenders alike about the consequences of non-payment and failure to reach agreement. It does not preclude, however, borrowers and lenders reaching bilateral agreements to address mortgage or other debt difficulty. A number of concerns have been raised about the balance of power between banks and debtors, which has commonly been referred to as a 'Bank Veto'. The reality is that it is in the best interest of both debtors and creditors to seek to conclude an acceptable and workable bilateral arrangement under the Personal Insolvency Act, be it a Debt Settlement Arrangement or Personal Insolvency Arrangement. The latter such arrangement will be of particular use for those persons experiencing difficulty with repayment of their mortgages and to provide, as appropriate, for debt restructuring. Both debtors and creditors have rights in a financial contract and these must be respected, having regard to the insolvency of the debtor. Of course, in the event that either a Debt Settlement Arrangement (DSA) or Personal Insolvency Arrangement (PIA) cannot be agreed, the ultimate resolution option is judicial bankruptcy.

- Mortgage Arrears Resolution Strategies: As announced in March, the implementation of the mortgage arrears strategies has further intensified with the Central Bank now setting time bound and measurable targets for the main banks on their progress in resolving, on a durable basis, the position of their mortgage customers who are in arrears on their mortgage. The “Keane Report” has already outlined a number of possible options that can be considered by banks to provide a sustainable solution for a mortgage in difficulty on a case by case basis. Mortgage lenders have now introduced long-term measures to assist mortgage holders in distress such as split mortgages, trade-down mortgages, negative equity mortgages and through the mortgage to rent scheme and the Central Bank will monitor the performance of banks against the targets.

- Comprehensive Advice and Guidance: In addition to existing arrangements, the Government has introduced a range of additional information and guidance resources to assist mortgage holders through what can be a difficult and stressful process. A dedicated website, www.keepingyourhome.ie, has been put in place to provide general public information on mortgages arrears issues. In addition, there is a Mortgage Arrears Information Helpline, which is established under the aegis of the Citizens Information Board, to provide more tailored information to individual callers. Finally, a panel of accountants has been put in place to provide “one to one” independent advice to borrowers who have been provided a long term forbearance resolution offer by their lender in respect of a mortgage on their primary home. All of these information services are provided at no direct charge to the users of the service.

- Keeping families in their homes: As a social housing response, a “mortgage to rent” scheme is now in place on a nationwide basis. This option will be available to households with unsustainable mortgages and who would qualify for social housing support and meet other appropriate criteria will allow the family, in the context of an agreed resolution to an unsustainable mortgage, to remain in their home.

Overall, while progressing these particular measures, the Government is also conscious of the need to restore the economy and employment levels and its overall economic policies are directed to achieve those objectives, the successful achievement of which will be of general benefit to those with mortgages as well as the general economy.

Excise Duties Yield

Questions (44)

Arthur Spring

Question:

44. Deputy Arthur Spring asked the Minister for Finance if he will provide a breakdown in excise returns by category and by month from January 2011 to April 2013. [21915/13]

Written answers

Minister for Finance

The breakdown in excise returns by category and by month from January 2011 to February 2013 is as follows:

2011	Alcohol	Tobacco	Oils	Carbon	VRT	Other Excise
Jan	87.8	0.6	234.7	14.5	41.5	12.1
Feb	35.9	26.8	176.7	44.7	57.7	9.0
Mar	51.2	64.7	183.0	23.3	49.1	8.2
Apr	67.9	96.1	180.2	32.2	45.9	9.5
May	67.5	65.4	177.5	19.4	33.5	5.5
Jun	65.6	102.9	177.9	26.9	36.1	4.8
Jul	70.8	113.7	174.3	22.1	31.4	12.5
Aug	72.0	109.7	185.6	20.5	19.5	6.1
Sept	70.2	78.3	174.0	22.2	36.4	9.0
Oct	64.7	90.0	174.7	22.9	14.6	10.8
Nov	75.3	110.7	181.3	24.3	12.2	7.8
Dec	100.8	267.2	109.9	25.3	10.4	4.6
TOTAL	829.5	1126.1	2129.8	298.2	388.4	100.0

2012	Alcohol	Tobacco	Oils	Carbon	VRT	Other Excise
Jan	87.8	1.0	223.8	16.8	47.7	8.5
Feb	35.6	52.8	166.7	41.3	62.9	4.1
Mar	50.6	55.8	176.7	24.5	56.1	4.0
Apr	64.7	70.8	166.8	34.2	44.5	9.0
May	61.4	108.0	180.9	26.0	33.6	4.8
Jun	73.3	121.8	168.6	33.3	33.6	4.0
Jul	68.4	80.2	167.7	27.9	25.8	10.7
Aug	64.7	92.4	175.9	26.7	21.1	5.6
Sept	68.7	68.3	165.3	26.4	17.2	5.8
Oct	65.9	99.8	175.1	29.7	14.5	14.6
Nov	85.0	97.5	171.9	33.6	11.2	5.4
Dec	120.0	264.7	87.9	33.6	11.2	4.0
TOTAL	846.1	1113.1	2027.3	354.0	379.4	80.5

2013	Alcohol	Tobacco	Oils	Carbon	VRT	Other Excise
JAN	93.5	0.87	231.39	25.96	52.06	8.25
FEB	40.63	104.83	158.9	42.74	64.61	2.99
MAR	50.98	52.32	165.34	33.56	53.00	3.20
APR	78.32	72	164.89	37.63	47.00	9.28
TOTAL	263.43	230.02	720.52	139.89	216.67	23.72

Excise Duties Yield

Questions (45)

Arthur Spring

Question:

45. Deputy Arthur Spring asked the Minister for Finance if he will provide a breakdown of the projected excise returns by category for 2013. [21916/13]

Written answers

Minister for Finance

Consistent with the recently published April Stability Programme Update, the forecast for excise duties in 2013 is €4,920 million. This is unchanged from the Budget 2013 estimate. It is important to take into account that this estimate is inclusive of the impact of all measures introduced in Budget 2013, including the increase in revenues from the increase in motor tax rates. With the exception of VRT which is forecast separately, the Department of Finance forecasts excise duties revenues on an aggregated basis and does not publish separate forecasts for any sub-components of individual tax heads.

IBRC Liquidation

Questions (46, 60, 64)

Gerry Adams

Question:

46. Deputy Gerry Adams asked the Minister for Finance further to Parliamentary Question No. 153 of 30 April 2013, if he will confirm, if he is entitled to instruct the Special Liquidator KPMG or the independent professional valuers of PWC and UBS pursuant to the Irish Bank Resolution Corporation Act 2013 to alter their preferred loan methodologys in order to ensure that the valuation of the total loan book of IBRC is at least €12.928 billion. [21918/13]

Pearse Doherty

Question:

60. Deputy Pearse Doherty asked the Minister for Finance if he instructs the Special Liquidator KPMG or indirectly the independent professional valuers of PWC and UBS pursuant to the Irish Bank Resolution Corporation Act 2013 to alter their preferred loan methodologies in order to ensure that the valuation of the total loan book of Irish Bank Resolution Corporation is greater than €12.928 billion combined with all the unguaranteed unsecured liabilities of the bank, the ELG liabilities of the bank and the Deposit Guaranteed Scheme liabilities of the bank that National Asset Management Agency’s acquisition of the remainder balance sheet of IBRC which is not sold to third parties would make all of those liabilities whole including providing an Exchequer boost of the €933.77 million the Exchequer has paid out for the ELG bonds as well as the £300 million of preference shares issued by him; and if he will make a statement on the matter. [21983/13]

Pearse Doherty

Question:

64. Deputy Pearse Doherty asked the Minister for Finance if the instructions given to the independent professional valuers of PWC and UBS, pursuant to the Irish Bank Resolution Corporation Act 2013, by the Special Liquidator KPMG or indirectly by him is to achieve the most accurate independent valuation of the current market value or whether the instruction given is to ensure that the total valuation of the total loan book of IBRC achieves at least €12.928 billion; if he will confirm that it would be advantageous to the Exchequer’s finances for 2013 that the independent valuation of the total loan book of IBRC is at least €12.928 billion in order to avoid additional Exchequer cost to meet the shortfall between the independent valuation and the price to which either the private investor or National Asset Management Agency will pay for the cumulative total balance of the loan book; if he will confirm whether NAMA is concerned that his interests are not aligned with those of NAMA who could be forced to take on assets at a larger price than it is able to sell in the short or medium term thus prolonging the retention of the IBRC assets by NAMA in order to avoid him facing up to losses now rather than in the future if NAMA make a loss on these assets [21987/13]

Written answers

Minister for Finance

I propose to take Questions Nos. 46, 60 and 64 together.

The Special Liquidators have responsibility for the appointment of independent valuers to value the assets of IBRC.

Section 9 of the IBRC Act provides that the Minister shall issue the Special Liquidator with instructions setting out the details of the manner in which the winding up of IBRC is to proceed. Section 9 also gives the Minister the power to give a direction to the Special Liquidator if he is of the opinion that it is necessary for the achievement of any of the purposes of the Act to do so. The Minister may revoke or amend the instructions to the Special Liquidator. A Special Liquidator shall comply with any instructions issued or directions given under the IBRC Act.

Section 14 of the IBRC Act requires the Minister to issue an instruction to the Special Liquidator as to the manner, consistent with the purposes of the IBRC Act, in which bank assets to be bid upon by NAMA, in accordance with a direction given under Section 13(1)(a), are to be valued; and to appoint a person to carry out an independent valuation of those bank assets.

Section 14 of the IBRC Act provides that the valuation of loan assets shall be valued using discounted cash flow analysis, taking into account the timing and reliability of cash flows, together with an appropriate discount factor to determine the value or, where appropriate, in accordance with other standard loan valuation methodologies.

The specific valuation methodologies to be employed will be agreed between the Special Liquidators and the independent professional valuers appointed by the Special Liquidators. However, in their determination of the valuation methodologies that ought to be employed, the Special Liquidators are required to comply with Section 14 of the IBRC Act as well as any further instructions or directions issued by the Minister pursuant to the IBRC Act 2013. Apart for any prescriptions concerning the valuation methodologies to be applied contained in the IBRC Act and in any further instructions or directions issued to the Special Liquidators, the independent valuation of the assets is solely at the discretion of the independent valuers.

Pursuant to the directions issued to NAMA in accordance with the provisions of the IBRC Act 2013, NAMA will be required to bid for the assets of IBRC (In Special Liquidation) at a price equal to the independent valuation.

NAMA Bonds

Questions (47)

Gerry Adams

Question:

47. Deputy Gerry Adams asked the Minister for Finance further to Parliamentary Question No.77 of 24 April 2013, if he will confirm that the National Asset Management Agency issued senior bonds totalling €12.928 billion to purchase the CBI’s remaining lending to the Irish Bank Resolution Corporation under the Facility Deed; if he will further confirm the total nominal amount of interest NAMA will pay to the Central Bank of Ireland for these bonds, assuming no redemption is made on these bonds in the next 12 months; if he will confirm whether the interest payments made on these bonds are pure profit or whether there is in fact an income cost for the Central Bank of Ireland holding these NAMA bonds; and if he will make a statement on the matter. [21919/13]

Written answers

Minister for Finance

I am advised that NAMA issued senior bonds totalling €12.928 billion as consideration for the Deed of Assignment and Transfer between CBI and NAMA and National Asset Resolution Ltd. Over the next 12 months, assuming current interest rate expectations and no redemptions on these bonds, two coupon payments, totalling approximately €37m, are expected to be paid to the CBI. The Central Bank does not comment on individual investment holdings. As NAMA bonds are managed together with the Bank’s other investment assets, any positive investment return at year end, after costs of funding are taken into account, will be the product of the Bank’s investment portfolio in aggregate and not individual investments in isolation.

NAMA Bonds

Questions (48, 49)

Gerry Adams

Question:

48. Deputy Gerry Adams asked the Minister for Finance further to Parliamentary Question No. 77 of 24 April 2013, that the National Asset Management Agency issued senior bonds totalling €12.928 billion to purchase the CBI’s remaining lending to the Irish Bank Resolution Corporation under the Facility Deed, the way €2 billion of outstanding IBRC borrowings have been satisfied as per official documentation from his Department detailing that a total of €15 billion of outstanding borrowings outside of the debt that was satisfied by the issuance of the Irish government bonds for the other net debt. [21920/13]

Gerry Adams

Question:

49. Deputy Gerry Adams asked the Minister for Finance further to Parliamentary Question No. 87 of 21 February 2013, if he will confirm that the total value of the National Asset Management Agency bonds now owned as consideration for a portion of this €2 billion additional debt and previously held by the Irish Bank Resolution Corporation is €884 million as per the IBRC 2012 interim reports; if he will detail further to the publication of the Central Bank of Ireland’s Annual Report on the 30 April 2013 the further assets held by the Central Bank of Ireland, previously pledged by IBRC which satisfy the additional €638 million of IBRC net debt that is outstanding. [21921/13]

Written answers

Minister for Finance

I propose to take Questions Nos. 48 and 49 together.

As the Deputy is aware, prior to liquidation, IBRC’s funding profile was primarily reliant on borrowings from the Central Bank of Ireland. The majority of funds were advanced to IBRC under a Special Master Repurchase Agreement (“SMRA”), involving the sale and repurchase of the c. €25bn nominal value Promissory Notes and €796m nominal value NAMA senior bonds. IBRC also had a smaller amount of outstanding borrowing under the Eurosystem’s Main Refinancing Operation secured by other assets with a nominal value of approximately €370m. In addition, €3.46bn nominal value 2025 Irish Government Bonds also provided significant secured funding in a market repo (see Parliamentary Question No. 157 of 30 of April 2013 for further information regarding the Bank of Ireland repurchase agreement). As is typical for collateralised lending arrangements, these repurchase agreements incorporated standard market terms including the requirement to provide collateral of a value in excess of the amount of lending extended under the agreement, i.e. “excess collateral”, whereby the collateral taken as part of the repurchase agreement is priced and subject to appropriate haircuts by the respective lenders.

As the Deputy is also aware, in addition to the repurchase agreements, ELA funds of approximately €15bn were advanced by the Central Bank under a Facility Deed which benefitted from a Ministerial Guarantee. The Central Bank also had security over all the ELA lending through a floating charge over the otherwise unencumbered assets of IBRC.

Upon appointment of the Special Liquidators existing funding arrangements between IBRC and the Central Bank of Ireland (CBI) were terminated. As a result, IBRC was obligated to repurchase the collateral provided under the repurchase agreements from its lenders at prices governed by those agreements. As IBRC was unable to repurchase this collateral with cash, the lenders retained and valued the collateral in fulfilment of IBRC’s obligations under the agreements, with the value of collateral in excess of the borrowings being due back to IBRC. In effect, the Promissory Notes, the NAMA Senior Bonds, the other assets and the 2025 Irish Government Bonds, held as collateral under the various repurchase agreements, were retained by the lenders in lieu of IBRC repurchasing this collateral with cash.

Under the terms of the various repurchase agreements, the value of the collateral in excess of the borrowed amount was applied by the lenders to reduce, or “set off”, the total amount outstanding under the Facility Deed. While the values applied to individual securities held as collateral under the various repurchase agreements are commercially sensitive and so are not provided in granular detail, the combined result of these set off arrangements was to reduce the total amount outstanding under the Facility Deed from c. €15bn at the time of the liquidation to €12.928bn at the time it was acquired by NAMA.

IBRC Liquidation

Questions (50)

Gerry Adams

Question:

50. Deputy Gerry Adams asked the Minister for Finance further to Parliamentary Question No. 238 of 19 February 2013, if he will provide an update on the composition and ownership structure of the Irish Bank Resolution Corporation subsidiaries of which there are nearly 300; if he will explicitly confirm whether the liquidator is responsible for overseeing the disposal of the IBRC wealth management business or whether this business is separate to the IBRC liquidation; if he will confirm whether a broker has been appointed to value this business and whether it is expected to be sold or transferred to the National Asset Management Agency; and if he will make a statement on the matter. [21922/13]

Written answers

Minister for Finance

The special liquidators have confirmed that Irish Bank Resolution Corporation Limited holds an interest (either directly or indirectly) in various entities, some of which are 100% owned, other subsidiaries have equity structures that reflect share ownership by the bank which ranges from minimal ownership up to and including full ownership by the bank. Interests are held in entities incorporated in a number of different jurisdictions however principally in the UK, Ireland and the US. The wealth management business is operated through Irish Bank Resolution Corporation Limited and the special liquidators will be responsible for overseeing the disposal of this business unit.

The Special Liquidators are in the process of appointing valuers to value Irish Bank Resolution Corporation’s Limited various equity interests and the valuations will be commenced shortly. The Special Liquidators will then engage in a sales process to dispose of this asset.