Written Answers Nos. 78-83
78. Deputy Thomas Pringle asked the Minister for Finance if he will provide a breakdown of the way the €7.5 billion given during the banks recapitalisation for mortgage debt has been used; which banks received this capital and the amount of this has been used to deal with the mortgage debt crisis. [42440/12]
Amharc ar fhreagraAs the Deputy will be aware, the Irish banks were required to raise €24 billion in capital following the 2011 Prudential Capital Assessment Review to remain above a minimum capital target of 10.5% Core Tier 1 in the base scenario and 6% Core Tier 1 in the stress Scenario. The Central Bank made its decision on required recapitalisation based on loan-loss projections along with further calculations concerning the prospective income, expenditure, and deleveraging plans of the banks as outlined in the 2011 Financial Measures Programme Report. To arrive at a stressed loan-loss estimate that was fully credible to the international markets, the Central Bank engaged BlackRock Solutions, a specialist in analysing potential loan losses under stressed conditions. I reiterate that the stress test scenarios were designed to represent extreme but plausible events, but were not forecasts. In terms of mortgages, the Central Bank has informed me that the following projected losses for the period 2011-13 were used for capital determination purposes:
|
€million |
- |
AIB |
- |
BOI |
- |
ILP |
- |
EBS |
- |
Total |
|
Type |
Base |
Stress |
Base |
Stress |
Base |
Stress |
Base |
Stress |
Base |
Stress |
|
Residential Mortgages |
€2,005 million |
€3,066 million |
€1,361 million |
€2,366 million |
€1,624 million |
€2,679 million |
€848 million |
€1,380 million |
€5,838 million |
€9,491 million |
|
Total |
€9,545 million |
€12,604 million |
€7,380 million |
€10,119 million |
€2,114 million |
€3,421 million |
€975 million |
€1,577 million |
€20,014 million |
€27,722 million |
In terms of troubled mortgage customers, the Central Bank is now engaging with all regulated mortgage lenders to ensure that each lender has appropriate strategies and plans to deal appropriately with all its customers experiencing mortgage difficulties. In addition, the protections of the Central Bank’s Code of Conduct on Mortgage Arrears will continue to be available to co-operating borrowers who are experiencing difficulty on their mortgage in respect of their principal private residence.
79. Deputy Joanna Tuffy asked the Minister for Finance if he will provide an update on all moneys repaid to the State by the banks (details supplied); and if he will make a statement on the matter. [42472/12]
Amharc ar fhreagraI note similarities between the Deputy’s question and the Deputy's Question No. 65 of 26 April last. In this context, I propose to answer the Deputy’s question by giving an update on the position since my reply on 26 April last. The total fees received to date from the covered banks in respect of both the CIFS and ELG schemes amount to €3.362 billion, which does not include interest accrued. This amount comprises €758.4 million in respect of the CIFS and €2,604.2 million in respect of the ELG scheme. A breakdown of fees paid by year for each of the covered banks can be seen in the following tables:
ELG fees paid to date by Participating Institutions:
|
Year |
IL&P |
BoI |
AIB |
IBRC |
EBS |
Total |
|
2010 |
€95.9 million |
€275.5 million |
€299.3 million |
€149.9 million |
€34.2 million |
€854.8 million |
|
2011 |
€172.9 million |
€448.7 million |
€464.9 million |
€85.5 million |
€62.6 million |
€1,234.6 million |
|
2012 |
€80.0 million |
€205.1 million |
€189.3 million |
€15.6 million |
€24.8 million |
€514.8 million |
|
Total |
€348.8 million |
€929.3 million |
€953.5 million |
€251 million |
€121.6 million |
€2,604.2 million |
CIFS fees paid to date by Participating Institutions:
|
Year |
IL&P |
BoI |
AIB |
Anglo |
EBS |
INBS |
Postbank |
Total |
|
2008 |
----- |
€32.3 million |
----- |
€37.9 million |
----- |
----- |
€4,000 |
€70.2 million |
|
2009 |
€35.4 million |
€138.1 million |
€174.7 million |
€94.8 million |
€9.7 million |
€23.8 million |
€20,000 |
€476.52 million |
|
2010 |
€14.8 million |
€68.3 million |
€58.3 million |
€54.9 million |
€5.9 million |
€8.8 million |
€15,000 |
€211.01 million |
|
2011 |
----- |
----- |
----- |
€700,000 |
----- |
----- |
----- |
€700,000 |
|
Total |
€50.2 million |
€238.7 million |
€233 million |
€188.3 million |
€15.6 million |
€32.6 million |
€39,000 |
€758.43 million |
I note that in this question, the Deputy mentions money given to the State and not just the Exchequer as was stated in the question referred to above. Covered institutions have signed up to agreements under both schemes involving an undertaking to pay my Department on demand all legal and administrative costs from time to time incurred in any way in connection with the making of the schemes and the giving of the guarantees. The money recouped is paid into my Department’s Appropiations-in-Aid Account, unlike the ELG and CIFS fees which are paid into the Exchequer. A total of €5.35 million has been received to date for recoupment of administrative and legal costs in support of both the CIFS and ELG Schemes. The bank recapitalisation commitments made by the State to date are set out in the following table:
|
. |
AIB/EBS |
BoI |
IL&P |
IBRC (Anglo/INBS) |
Total |
|
Government preference Shares (2009) - NPRF |
€3.5 billion |
€3.5 billion* |
----- |
----- |
€7 billion |
|
Capital contributions (with Promissory Notes as consideration) /Special Investment Shares (2010) – Exchequer ** |
€900 million |
----- |
----- |
€30.7 billion |
€31.6 billion |
|
Ordinary Share Capital (2009) – Exchequer |
----- |
----- |
----- |
€4 billion |
€4 billion |
|
Ordinary Share Capital (2010) - NPRF |
€3.7 billion |
----- |
----- |
----- |
€3.7 billion |
|
Total pre-PCAR 2011 (A) |
€8.1 billion |
€3.5 billion |
----- |
€34.7 |
€46.3 billion |
|
PCAR 2011: |
AIB/EBS |
BoI |
IL&P |
Anglo/INBS |
Total |
|
Capital from Exchequer*** |
€3.9 billion |
- |
€4 billion |
----- |
€7.8 billion |
|
NPRF Capital |
€8.8 billion |
€1.2 billion |
----- |
----- |
€10 billion |
|
Total PCAR (B) |
€12.7 billion |
€1.2 billion |
€4 billion |
----- |
€17.8 billion |
|
Total Cost of Recap for State (A) + (B) |
€20.7 billion |
€4.7 billion |
€4 billion |
€34.7 |
€64.1 billion |
* €1.7bn of BoI’s government preference shares were converted to equity in May/June 2010 (€1.8bn still left in existence). The government also received €0.5bn from the warrants relating to BoI’s preference shares (excluded from table above). In addition the State received €1.1bn stock coupons from BoI and AIB relating to the Government Preference shares.
** The IBRC amount is made up of a total capital contribution for Anglo / INBS of €30.6 billion and a special investment share of €0.1bn (INBS). The Anglo / INBS capital contribution impacted in full on the GGB in 2010. The consideration for the Anglo / INBS capital contribution was €30.6 billion of promissory notes. These Promissory Notes are an amount due from the State to IBRC. Each year, on 31 March, €3.06 billion is paid by the Exchequer to Anglo / INBS as part of the scheduled repayments of the promissory notes. The first such repayment was made on 31 March 2010.
*** The Exchequer cost of the 2011 BoI recap is shown net of share sale to private investors (Completed in October, 2011)
As the Deputy will be aware, the banks were required to raise a total of €24 billion as a result of the Central Bank’s 2011 Prudential Capital Assessment Review. However, primarily as a result of successful private equity contributions, asset sales and burden sharing with bondholders the Government only had to inject €16.5 billion into the relevant institutions. In addition, the State acquired Irish Life for €1.3 billion to complete the recapitalisation of Irish Life & Permanent. It is expected that the proceeds of an onward sale of Irish Life in due course will reduce the amount the State has committed to the bank recapitalisation. The State has also received cash dividend payments from the Bank of Ireland Government preference shares in the amount of €400 million to date. The State also received its first cash coupon of €300 million in relation to the Contingent (CoCo) Capital instruments in July 2012, split between AIB - €1.6 billion, BoI - €1 billion and PTSB - €400 million.
80. Deputy Robert Troy asked the Minister for Finance if he will examine the current number of board members who are still in situ on the boards of banks here even though they are responsible for some of the disastrous policies that contributed to the economic collapse; if he intends to make these people answerable for their actions; and if he will make a statement on the matter. [42476/12]
Amharc ar fhreagraAs the Deputy is aware, in response to the Nyberg report and with regard to the restructuring of the banking sector, I stated:
"A programme of rotation of board members, commencing with board members appointed before September 2008, will be expected to be part of the plan. This should apply to both
Executive and Non Executive Board members and provides a process to ensure a smooth succession of incumbent board members who were in place before September 2008.
I expect this succession to be substantially completed by early 2012, and will use my powers as shareholder to affect such changes if necessary."
Across the financial institutions covered by the Credit Institutions (Financial Support) Act 2008, only 1 of the 43 board members currently in place was in place in September 2008. That single director, Mr. Richie Boucher of Bank of Ireland, has passed a full fitness and probity review by the Central Bank. The Central Bank Reform Act 2010 became operational on 1 December 2011 when the Central Bank prescribed regulations into law setting out those functions (“controlled functions”) which would be covered by the Act, and a smaller subset of controlled functions (“pre-approval controlled functions” or “PCFs”) which will require the prior approval of the Central Bank before an appointment can be made to a Bank. The Central Bank fulfils its functions under the Act by processing applications for approvals to all PCFs in all regulated financial service providers since 1 December 2011. The Central Bank may refuse to approve a proposed appointment to a PCF role where it is of the opinion that the proposed appointee is not of such fitness and probity as is appropriate to perform the relevant function. Where the Central Bank refuses to approve a proposed appointment, then a regulated financial service provider may not appoint the person to the role.
Further, the Central Bank as part of its role in the ongoing supervision of the financial services sector, including the banking industry, may from time to time consider that there is reason to suspect the fitness and probity of any person performing a controlled function and may commence an investigation into that person. The existence and progress of such investigations are confidential and details of such investigations may not be disclosed by the Central Bank. As previously announced, the Central Bank is reviewing the position of executive and non-executive directors of covered institutions that received state support and who are remaining in director posts after 1 January 2012 to decide whether or not an investigation into any of those persons might be appropriate. This process provides opportunities for persons to make representations to independent decision makers appointed by the Central Bank. The Central Bank does not comment on individual cases. All assessments of fitness and probity of persons being proposed to PCF roles, and of persons performing controlled functions are made with respect to the criteria set out in Section 25(3) of the Act and a Code issued by the Central Bank under Section 50 of the Act entitled “Fitness and Probity Standards (Code issued under Section 50 of the Central Bank Reform Act 2010)".
81. Deputy Jerry Buttimer asked the Minister for Finance if he will provide a breakdown of salaries paid by the National Assets Management Agency to its employees, in bands of €25,000; the number of employees in each band; the qualifications and experience of the employees in each band; and if he will make a statement on the matter. [42484/12]
Amharc ar fhreagra82. Deputy Jerry Buttimer asked the Minister for Finance the benchmarks and criteria used by the National Assets Management Agency in determining the salaries paid to its employees; and if he will make a statement on the matter. [42485/12]
Amharc ar fhreagraI propose to take Questions Nos. 81 and 82 together.
I refer the Deputy to my responses to Parliamentary Questions from Deputy Patrick O’Donovan on 18 September last on the same topic which I have set out below. All NAMA staff are employees of the NTMA. Under Section 42 of the NAMA Act 2009, the NTMA assigns staff to NAMA. Other than a small number of staff reassigned from other functions within the NTMA, NAMA staff are employed by the NTMA on the basis of specified purpose contracts. Their employment lasts for as long as their particular skills and experience are required by NAMA. NAMA reimburses the NTMA the costs incurred by the NTMA in assigning staff and providing business and support services to NAMA. As of 24 August 2012, some 217 staff had been assigned by NTMA to NAMA. The highest paid executive in NAMA is the Chief Executive Officer whose salary is €430,000. However, the CEO agreed to a request from me that he waive 15% of salary in 2012, thereby reducing it to €365,500. Under the NTMA business model, there are no general pay scales. Staff are employed on the basis of confidential individually negotiated contracts. The average annual salary of staff assigned to NAMA is €100,000. This reflects the fact that, given the nature of its activities, the staffing complement assigned to NAMA is primarily composed of experienced professional staff with substantial private-sector experience. Remuneration scales by band for all NTMA and NAMA staff are set out in NTMA's 2011 Annual Report. Vacant positions within NAMA are openly advertised on the NTMA website and positions are filled through a process involving competitive interview and aptitude tests.
83. Deputy Michael McGrath asked the Minister for Finance if he will provide details of all items of art that have come under the control of National Asset Management Agency since the agency's establishment including details of the number of such items; the estimated aggregate value and the number of NAMA debtors involved; the full details including proceeds of any sales of art that have been executed so far showing separately sales by NAMA and sales arranged by NAMA debtors with the agency's consent; if he will provide details of the sales arrangements that have applied including tendering procedures and the name of any selling agents appointed by NAMA and by NAMA debtors with the consent of NAMA; and if he will provide details of any further plans the agency has for the disposal of any items of art under its control. [42509/12]
Amharc ar fhreagraThe Deputy will note that NAMA has acquired loans that are secured, in the vast majority of cases, by property assets, a detailed breakdown of which is available in NAMA's Annual Report and Financial Statements 2011. NAMA advises that, in the case of debtors that it manages directly, the value of art that it currently holds as security for its loans is of the order of €7.5 million. This relates to four debtor connections. NAMA further advises that art belonging to a fifth debtor connection has been sold for an amount of €1.9 million and that art belonging to a sixth debtor connection is currently on the market for sale. The Deputy will appreciate that it is not appropriate for commercial reasons to discuss the expected realised value of assets that are currently on the market. The Deputy will be aware that NAMA does not own nor does it sell assets, including art, securing its loans. The sale of these assets is undertaken and managed by their owners or, in enforcement cases, on behalf of these owners by duly appointed Insolvency Officer Holders.
NAMA advises that the sale of art by debtors and Receivers/Administrators is conducted in accordance with the prevailing market practice for that asset and the jurisdiction to which the sale relates. The strategies adopted, including the engagement of selling agents, are designed in all cases to maximise the realised proceeds from the sale of the art. I would also note that while it is the clear policy of NAMA itself to maximise the realised proceeds from all sales of assets securing its loans, it is also clearly in the absolute interest of NAMA debtors to maximise the realised proceeds from the sale of their assets in repayment of their debt. The Deputy will also note the legal, fiduciary and professional obligation on Insolvency Office Holders to maximise the realised proceeds from the sale of debtor assets. NAMA advises that sale arrangements applied for the disposal of art are a matter for debtors and appointed Receivers/Administrators in accordance with Agency guidelines and that it would not be appropriate for it to detail the future disposal strategies, including timelines, for the sale of art by debtors and Insolvency Office Holders.
