Regarding statements made on the first matter raised by the Deputy, clearly what has emerged since then, in terms of the governance issues that relate to the bank and obviously the subsequent establishment of NAMA and the subsequent writing down of assets to the tune of 55%, has meant that the capital requirements for that bank have greatly increased. Regarding the €2 billion, we would also make the point that the guarantee in itself had provided us with ability to fund the banking system and indeed banks have been paying for that guarantee, which was set out for a two-year period.
The issue of the €2 billion injection on 31 May is part of that additional capital required to ensure that the bank continues to meet its regulatory capital requirements in the context of the losses the bank experiences from the transfer of its loans into NAMA. As indicated in the statement of the Minister for Finance to the Dáil at the end of March, further capital, estimated to amount to up to €10 billion, will be needed for Anglo Irish Bank to fully secure its capital position based on the information available to us at this point.
The €2 billion capital injection is in line with what was expected might arise from the transfer of the first tranche of Anglo Irish Bank's loans into NAMA and was approved by the European Commission on that basis at the end of March. Without this capital injection, Anglo Irish Bank would not meet its regulatory capital requirements and would need to be immediately wound down. That would mean a fire sale of assets and capital losses of at least €40 billion to the State. In addition, in liquidation the State would have to provide of the order of €70 billion of cash up front to meet the deposits, bond holders and liabilities due to the euro system. Of course, a portion could eventually be mitigated by asset sales.
The availability of the contingency provision was made clear in the Commission's press statement at the end of March providing state aid approval for the provision of additional capital support for Anglo Irish Bank. The €2 billion contingency provision, provided alongside the €8.3 billion capital support for Anglo Irish Bank at the end of March is being activated following the NAMA transfers earlier this month.
The discount on the loans transferred from Anglo Irish Bank into NAMA was 55%, which was in excess of the 38% discount the bank was applying to these loans on its books at the end of March. The total amount of capital provided to Anglo Irish Bank to date is €14.3 billion. Some €4 billion in capital was provided to Anglo Irish Bank in 2009, €8.3 billion in March 2010 by way of a promissory note and €2 billion further capital is now being provided to Anglo Irish Bank by way an addition to the promissory note.