Dáil Éireann Debate, Tuesday - 24 November 2009
159 Deputy Ciarán Cuffe asked the Minister for Finance his views on the systemic importance of banks (details supplied) in the context of the proposal to establish the National Asset Management Agency; and if he will make a statement on the matter. [42691/09]
Amharc ar fhreagraAs the Deputy will be aware, the institutions referred to were specified as covered institutions under the bank guarantee Scheme, established pursuant to the Credit Institutions (Financial Support) Act 2008. The systemic importance of each institution covered by the Scheme was confirmed by the Governor of the Central Bank, and the Scheme was approved by the European Commission under EU State aid rules. The European Commission also specifically acknowledged the systemic importance of one of the institutions, in its approval of the Government's provision of capital.
As with our other major financial institutions, the systemic importance of these institutions derives from their scale and their integration with our economy. As per each institution's latest published accounts, the balance sheets exceed €88bn in one case and €14bn in the other. Each institution has a substantial deposit base, sourced through thousands of customers, companies and through other financial institutions, in Ireland and internationally. The loan book of each institution includes lending for land and development or associated exposures which is eligible for transfer to NAMA, and also significant levels of lending for commercial, investment, and residential property and to other sectors, which is not eligible for transfer to NAMA. A key principle of the Government's action in addressing the financial crisis has been to maintain the viability of such systemic institutions, to prevent wider implications and costs for our economy, and eligibility for coverage by the bank guarantee Scheme and transfer of assets to the National Asset Management Agency is therefore structured on the basis of systemic importance.
NAMA is being established to restore confidence in the Irish banking sector and facilitate the flow of credit into the real economy. Section 2 of the NAMA Act also provides that NAMA is being established, inter alia, to protect the taxpayers and the State's interest relating to the guarantees issued by the State in September 2008 and to facilitate the restructuring of credit institutions of systemic importance. As regards NAMA, each institution wishing to participate must apply and will be assessed in line with the eligibility criteria outlined in Section 65(2) of the NAMA Act.
