Banks Recapitalisation

Dáil Éireann Debate, Thursday - 3 May 2012

Thursday, 3 May 2012

Ceisteanna (70, 71)

Éamon Ó Cuív

Ceist:

70 Deputy Éamon Ó Cuív asked the Minister for Finance if the decision by EUROSTAT recently to consider the investment in AIB and Bank of Ireland and other covered institutions in 2011 as national debt will have long term repercussions under the fiscal compact treaty if passed, particularly in relation to achieving of the 60% debt/GDP ratio; if it will, when will these impacts arise and the magnitude of the extra payments each year that will arise as a result of this decision; and if he will make a statement on the matter. [22451/12]

Freagraí scríofa

Minister for Finance (Deputy Michael Noonan)

In July 2011 a net amount of €16.5 billion was injected into Irish financial institutions. At the time of the end-September Maastricht return, it was indicated publicly that a full examination of the deficit-impacting amount of this transfer would be made before the next notification. The outcome of this exercise is that of the €16.5 billion injected in June 2011, €5.8 billion is classified as a deficit-increasing capital transfer. This adds 3.7 per cent of GDP to the deficit for 2011 only. However, the full net recapitalisation of €16.5 billion in July 2011 was fully reflected in Ireland's forecast General Government Debt for end-2011 reported to Eurostat in September 2011. It is also included in the end-March 2012 Maastricht return in respect of the end-2011 debt position. The statistical reclassification from financial transaction to capital transfer affects the general government deficit only. Therefore there is no impact on our debt to GDP ratio as a result of this statistical reclassification.

Clare Daly

Ceist:

71 Deputy Clare Daly asked the Minister for Finance if he will provide an estimate of the financial loss to the State and taxpayer arising from the unsafe loan undertakings provided by solicitors to banks, made public by the National Asset Management Agency during March 2012. [22473/12]

Minister for Finance (Deputy Michael Noonan)

I am advised by NAMA that the estimated value of downward adjustments applied to the consideration paid to banks in respect of the acquisition of loans as a result of security defects identified in legal due diligence is €477 million. Only a minor part of this relates to legal undertakings provided by solicitors. I understand that as a consequence of the defects identified during the legal due diligence, the valuation of the assets was reduced and a lesser amount was paid by NAMA. NAMA advise me that it does not expect to suffer a loss on these acquisitions arising from the solicitors undertakings.