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Government Bonds

Dáil Éireann Debate, Tuesday - 21 May 2013

Tuesday, 21 May 2013

Questions (271)

Pearse Doherty

Question:

271. Deputy Pearse Doherty asked the Minister for Finance the total amount in euro of regulatory capital which is currently held by Allied Irish Banks, Bank of Ireland and Permanent TSB as a requirement arising from its holdings of Irish government bonds; if he will detail what regulatory changes at a domestic, European or global level that may lead to an increase in capital being necessary to hold for banks retaining Irish Government bonds; if he will detail the total amount of interest that shall be paid by the Irish Government on these government bonds held by Allied Irish Banks, Bank of Ireland and Permanent TSB in 2013, 2014 and 2015 assuming no sale of these bonds by the banks in question are made for those three years; and if he will make a statement on the matter. [24259/13]

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Written answers

I can inform the Deputy that Allied Irish Banks, Bank of Ireland and Permanent TSB hold zero regulatory capital against their holdings of Irish government bonds as the Central Bank of Ireland has agreed that Irish government bonds which are denominated in the domestic currency and funded in that currency have a 0% risk weighting. As the Deputy will be aware AIB, BOI and PTSB use Irish government bonds as part of their normal liquidity management operations. The institutions cannot provide the total amount of interest to be paid on their Irish Government bonds as this could be construed as a forward looking statement.

Allied Irish Banks, Bank of Ireland and Permanent TSB have provided me with the following responses to your PQ:

AIB

The total amount in euro of regulatory capital which is currently held by Allied Irish Banks as a requirement arising from its holdings of Irish government bonds is zero as Irish Government Bonds are risk weighted at zero percent.

Regulatory changes at a domestic, European or global level are not anticipated to lead to an increase in capital being necessary to hold for banks retaining Irish Government bonds.

BOI

Bank of Ireland’s Pillar 3 report for the year to 31 December 2012 which can be found at http://www.bankofireland.com/fs/doc/publications/investor-relations/boi-pillar-iii-disclosures-2012.pdf gives comprehensive disclosures on its Regulatory Capital including amounts held in relation to Sovereign Bonds (particularly pages 8-12 and pages 14-15), and the regulatory changes arising as a result of Basel III (particularly pages 5-6).

Bank of Ireland’s annual report for the year to 31 December 2012 gives comprehensive disclosures on its holdings of Irish Government Bonds (particularly pages 203-204 and pages 316-317) and of its relations with the Irish State (pages 259-262).

PTSB

Permanent TSB currently holds €0m of regulatory capital for Irish Government bonds and Government guaranteed bonds.

The CBI has agreed this weighting of 0% for Irish Government debt denominated in domestic currency and funded in that currency.

CRD IV rules, effective from January 2014, explicitly assign 0% risk weight for the exposures to the Member States’ central governments denominated and funded in the domestic currency of that Central Government.

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