Dáil Éireann Debate, Tuesday - 3 May 2011
165 Deputy Michael McGrath asked the Minister for Finance if he has raised with the EU-IMF and ECB the suggestion of debt-for-equity swaps in the Irish banks as a measure to reduce the amount of recapitalisation required by the Irish taxpayer; and if he will make a statement on the matter. [9744/11]
Amharc ar fhreagraA number of international organisations including the EU Commission and the Financial Stability Board are investigating the potential for various forms of burden-sharing such as debt-write downs, debt-for-equity swaps and contingent capital. These are sometimes referred to as "bail-in" tools. No clear international consensus about the specifics of how such tools should work in practice has emerged. This international work is looking forward. Burden sharing with current bank debt holders is not being examined by these organisations. I have already indicated that the topic of burden sharing, including a debt for equity swap, for current unguaranteed senior bank debt was discussed with the EU, IMF and ECB in the context of the Government's approach to restructuring the banking system as set out in my statement to the House on banking matters on 31 March last. In my statement. I emphasised that it is vital that the proposed three banks — Bank of Ireland, AIB-EBS, and Irish Life and Permanent — are able to operate in the market place following their reorganisation, including regaining access to normal funding mechanisms in due course. The Government therefore decided, informed by the reservations of the ECB, that these banks will not share the burden with senior bondholders of their constituent banks, whether guaranteed or unguaranteed. As the Deputy is aware, work is under way to ensure appropriate burden-sharing by subordinated bondholders in AIB, Irish Life and Permanent and Bank of Ireland. I also reiterated in my statement that it is Government policy to work out Anglo Irish Bank and Irish Nationwide Building Society in an orderly manner over time and to minimise further injections of taxpayer capital into either institution. I have made clear that should additional capital be required, the Government will consult the external partners on the timeframe and means of recapitalising those institutions at minimum cost to the taxpayer, having regard to the financial stability impacts in Ireland and abroad.
