Dáil Éireann Debate, Tuesday - 25 March 2014
246. Deputy Michael McGrath asked the Minister for Finance if he will specify in detail the contingent liability exposure of the State relating to banking sector guarantees, including debts that have not yet matured under the eligible liabilities guarantee scheme and the also potential liabilities under deposit guarantee scheme; and if he will make a statement on the matter. [13629/14]
View answerThe outstanding Government Guarantees as at 31 December 2013 in relation to the Irish banking sector and the National Asset Management Agency are set out in the attached table. It should be noted that the total guarantees include a "double count" of €11.715 bn, as this risk is effectively covered both by the NAMA senior bond guarantee and by the guarantee to National Asset Resolution Limited.
The Deposit Guarantee Scheme (DGS) provides that all eligible deposits, up to a limit of €100,000 per depositor per credit institution, are guaranteed to be repaid by the DGS. The Central Bank of Ireland is responsible for the operation of the DGS, which covers licensed credit institutions operating in the State. Each credit institution covered by the DGS is required to maintain a balance in the Deposit Protection Account (DPA) equivalent to 0.2% of their total deposits in order to fund the DGS.
Where a depositor is entitled to compensation under the DGS, the Central Bank will make the payment in accordance with the DGS Regulations and will charge this payment on the deposit protection account. The Financial Services (Deposit Guarantee Scheme) Act 2009 provides that if the Central Bank charges on the deposit protection account any payment out of its own funds in accordance with the DGS Regulations, the amount of the payment shall, with the approval of the Minister for Finance, be repaid to the Central Bank out of the Central Fund or the growing produce of that Fund within 3 months. Section 8(2) of this Act provides that any amounts payable from the Central Fund to the Central Bank for such purposes shall be repaid to the Central Fund from the deposit protection account.
As outlined above, the deposit protection account is funded by the credit institutions that are covered by the DGS. As such, any exposures under the deposit guarantee scheme will ultimately be recouped from credit institutions with the effect that any liability for the State should only ever be temporary in nature.
|
Guarantees to Irish banking sector/NAMA |
Relevant Statute |
Amount Outstanding End 2013 (€m) |
|
Credit Institutions (Financial Support) Act 2008 Eligible Liabilities Guarantee |
Credit Institutions (Financial Support) Act 2008 |
20,091 |
|
Exceptional Liquidity Assistance |
Credit Institutions (Financial Support) Act 2008 |
0 |
|
National Asset Management Agency:
|
|
|
|
Senior Bond Guarantee
|
National Asset Management Agency Act 2009
|
34,618 |
|
Guarantee to National Asset Resolution Limited (this guarantee covers much the same risk as the senior bond guarantee)
|
Credit Institutions (Financial Support) Act 2008 |
11,715 |
|
Irish Bank Resolution Corporation Ltd (formerly Anglo Irish Bank) |
Credit Institutions (Financial Support) Act 2008 |
n/a |
|
Total |
|
66,424 |
