Written Answers Nos. 102-117
102. Deputy Pearse Doherty asked the Minister for Finance when Ireland will apply for retrospective recapitalisation, through the European Stability Mechanism, of the moneys used to save Bank of Ireland and Allied Irish Banks; and if he will make a statement on the matter. [22402/14]
Amharc ar fhreagraThe Euro-area Heads of State or Government agreed in June 2012 that "it is imperative to break the vicious circle between banks and sovereigns", and that when a Single Supervisory Mechanism (SSM), involving the ECB, is in place and operational, the European Stability Mechanism could recapitalize banks directly.
The Eurogroup meeting on 20 June 2013 agreed on the main features of the European Stability Mechanism's Direct Recapitalisation Instrument (DRI). There is a specific provision included in those main features, which states that "The potential retroactive application of the instrument should be decided on a case-by-case basis and by mutual agreement." Therefore, the agreement, that we were active in negotiating, keeps open the possibility to apply to the European Stability Mechanism for a retrospective direct recapitalisation of the Irish banks, should we wish to avail of it.
The Eurogroup meeting on 5 May 2014 considered a proposed resolution to the outstanding issues on the operational framework of the ESM's DRI put forward by the Eurogroup President, Mr Dijsselbloem. This proposal was broadly supported. This proposal is expected to be put to the Eurogroup on 19 June 2014 for a decision. After this national approval procedures must be completed. It will not be possible to apply for the DRI until it is in effect. The DRI will come into effect once the SSM is in place and operational. This is expected to be in the fourth quarter of this year. Finally, both I and my Government colleagues will ensure that Ireland's case for retrospective direct recapitalisation is made at all levels as appropriate. I remain confident that the commitment made by the Euro-area Heads of State or Government in June 2012 to break the vicious circle between banks and sovereigns will be respected.
104. Deputy Michael McGrath asked the Minister for Finance if officials in his Department are allowed to use non-departmental e-mail addresses, telephone numbers or other methods of communication for departmental business; and if he will make a statement on the matter. [22440/14]
Amharc ar fhreagraThe Department has an Information and Communications Technology Usage policy (Office Notice 1/2006) which applies to:
- Those who use the Department's ICT facilities, whether they be permanent, temporary, contract staff or otherwise;
- To all use of Department ICT facilities both during and outside normal office hours, whether for business or personal use,
- To all use of and interaction with all ICT equipment and facilities
- To remote access to the Department's facilities
- To use of personal web-based addresses on Departmental property
Other relevant policies include Email Policy, Use of Laptop Policy, Protecting the Use of Confidential Data and a USB Storage Device Policy.
The Department's policy prohibits the use of web based mail accounts if they are intended to circumvent the terms of the Information and Communications Technology Usage Policy or the Department email policy or any technical controls (e.g. firewalls, virus control, and monitoring software) in place to help enforce those policies.
USB Storage Policy*
The Department's USB Storage Policy prohibits the use of any privately owned equipment or media within the Department of Finance computer system. Only the Department of Finance owned equipment or media may be connected to our computer system or used to store the Department of Finance data. Encrypted USB storage device is the standard for the Department of Finance.
Laptop Policy
Each laptop user must take personal responsibility for the security of the equipment, software and data in his/her care. It is the responsibility of all staff to ensure all data that they access, manage and control as part of their daily duties is carried out in accordance with the Data Protection Acts and in line with the Guidance Note and Code of Practice. Users are not permitted to circumvent, subvert or override any of the Department's security measures for laptop computers;
Social Media
Twitter is used as the main social media tool of the Department of Finance and policy has been developed in this regard. It is accessible at @IRLDeptFinance. The account is managed by authorised Press Office staff. All official Department of Finance press releases are announced via Twitter in addition to normal distribution channels. There is also guidance on the use by staff of social media sites
Phone Policy
Mobile phones are issued to staff on a business case basis for the purpose of conducting of Departmental business. Functionality includes users e-mail and the phones are password encrypted by the IT unit to ensure that e-mails sent from and received by these mobiles are securely protected. Staff are allowed to use their private phones for business purposes. This allows us to reach staff who have not being issued with a department mobile phone outside of office hours as necessary.
*A USB Flash device is a pocket-sized external storage device used for general storage and transfer of data between computers.
105. Deputy Joan Collins asked the Minister for Finance further to Parliamentary Question No. 106 of 30 April 2014 and a previous statement by the Governor of the Central Bank of Ireland that it is only in the matter of setting interest rates that his national loyalties are subordinated to the supranational good of the eurozone, if he will confirm that the Governor will not accelerate the disposal of the €25 billion of sovereign bonds used to swap with the Irish Bank Resolution Corporation promissory notes in February 2013, and if such accelerated disposals place an additional net cost on the State. [22481/14]
Amharc ar fhreagraThe Central Bank of Ireland is independent in the exercise of its functions and the management of its investment holdings are a matter for the Bank itself. Therefore, I am not in a position to confirm what actions the Governor of the Central Bank of Ireland may or may not take. Subsequent to the liquidation of IBRC, the Bank acquired €25bn of Floating Rate Notes (FRNs) and €3.46bn of Government Fixed Coupon 2025 bonds. The Central Bank's Annual Report for 2013 indicates that it intends to sell the combined portfolio of the FRNs and the fixed rate bond as soon as possible, provided conditions of financial stability permit. The Bank also indicates that, as a minimum, it will sell securities in accordance with the following schedule: to end 2014 (€0.5 billion), 2015-2018 (€0.5 billion per annum), 2019-2023 (€1 billion per annum), and 2024 on (€2 billion per annum until all bonds are sold). The Report also notes that, as part of this strategy, the Bank sold €350mn of its holdings of the Government 2025 Fixed Rate Bond in 2013.
106. Deputy Joan Collins asked the Minister for Finance if he will estimate the interest to be paid by the State between February 2013 and end December 2014 on the €25 billion sovereign bonds used to swap with the Irish Bank Resolution Corporation promissory notes in February 2013. [22482/14]
Amharc ar fhreagra107. Deputy Joan Collins asked the Minister for Finance if he will estimate the interest to be paid by the State between February 2013 and end December 2014 on the portion of the €25 billion sovereign bonds used to swap with the Irish Bank Resolution Corporation promissory notes in February 2013 that have been disposed of by the Central Bank of Ireland to the bond market, including the €350 million of bonds which the Governor of the Central Bank of Ireland recently stated had been disposed of in 2013. [22483/14]
Amharc ar fhreagraI propose to take Questions Nos. 106 and 107 together.
The National Treasury Management Agency (NTMA) issued eight new Floating Rate Treasury Bonds to the Central Bank of Ireland (CBI) on 8 February 2013 to replace the Promissory Notes previously held by IBRC. The bonds have maturities ranging from 25 to 40 years and pay interest every six months in mid-June and in mid-December based on the six-month Euribor interest rate plus an interest margin which averages 2.63% across the eight issues. Total cash interest on the floating rate bonds in 2013 was just under €0.65 billion. Cash interest payable in 2014 is currently estimated to be just under €0.8 billion, the increase compared to 2013 largely reflecting the fact that a full year's interest is payable this year. The CBI is presently the holder of the entire portfolio of these floating rate bonds and, on that basis, interest payable is currently accruing to the CBI. The CBI has undertaken that bonds to the minimum value indicated will be sold in accordance with the following schedule: €0.5 billion to end-2014, €0.5 billion per annum in 2015-2018, €1 billion per annum in 2019-2023 and €2 billion per annum from 2024 onwards. Interest payable will accrue to the purchaser of the bonds, rather than the CBI, once the bonds are sold. During 2013 the CBI sold €350 million of its holdings of the 5.4% Treasury Bond 2025. This is a fixed rate bond and so separate from the Floating Rate Treasury Bonds.
108. Deputy Joan Collins asked the Minister for Finance if he will estimate the net cost, taking account of the fact that any surplus at the Central Bank of Ireland is remitted to the Exchequer, to the State of the decision of the Central Bank of Ireland to dispose of the initial target of €500 million of the €25 billion of the so-called promissory note sovereign bonds before the initial target date of 31 December 2014; and if he will make a statement on the matter. [22484/14]
Amharc ar fhreagraThe Central Bank of Ireland is independent in the exercise of its functions and the management of its investment holdings is a matter for the bank itself. Neither I nor the Department of Finance have any role in those matters. Subsequent to the liquidation of IBRC the Central Bank acquired €25bn of Floating Rate Notes (FRNs) and €3.46bn of Government Fixed Coupon 2025 bonds. The Bank undertook to sell the combined portfolio of the FRNs and the fixed rate bond as soon as possible provided that conditions of financial stability permit. The Bank also indicated that, as a minimum, it will make sales in accordance with the following schedule: to end 2014 (€0.5 billion), 2015-2018 (€0.5 billion per annum), 2019-2023 (€1 billion per annum), and 2024 on (€2 billion per annum until all bonds are sold). The Bank's recent Annual Report notes that sales have been made from this combined portfolio, with the Bank selling €350mn of its holdings of the Government 2025 Fixed Rate Bond in 2013. The timing of the sales is a matter for the Central Bank which may elect to sell bonds at a particular time if it feels that this is the best course of action, for example, in order to take advantage of favourable market conditions.
The Central Bank provides the Department of Finance with an estimate of expected surplus income to be paid to the Central Fund on a regular basis. This estimate will continue to form part of the Government's overall budgetary strategy. However, the level of detail on the composition of its profits provided by the Central Bank of Ireland to the Department is not sufficiently granular to enable the Department to estimate the impact on those profits of the timing of specific bond disposals undertaken by the CBI.
109. Deputy Jack Wall asked the Minister for Finance if a person (details supplied) in County Kildare is due any refund on their tax paid to date; and if he will make a statement on the matter. [22496/14]
Amharc ar fhreagraI am advised by Revenue that Section 960H of the Taxes Consolidation ACT (TCA) 1997(as amended) provides that where a customer is due a refund of tax, Revenue may offset the amount in full, or in part, to satisfy any other outstanding tax liabilities. Before a refund in respect of any tax is repaid, the taxpayer's overall tax status is examined and any liabilities are satisfied/part satisfied by offset from the refund amount.
In regard to the specific case to which the Deputy refers, I am advised that a PAYE refund was due on foot of a review of the 2013 tax year. However, the person in question had an outstanding tax liability in respect of a previous year and this was paid by offset from the 2013 refund amount. The remaining amount was also offset as part payment against the person s outstanding Local Property Tax (LPT) and Household Charge (HHC) liabilities in respect of one of his properties.
Revenue has confirmed to me that a member of the LPT team made direct contact with the person in regard to this issue and confirmed the various offsets to him. The LPT team member also confirmed the post offset LPT/HHC liabilities still outstanding and advised the person on the various payment options available to him. The person committed to bring his remaining LPT/HHC affairs up to date in the immediate future.
110. Deputy John McGuinness asked the Minister for Finance if he will confirm the qualifications of the current CEO of the financial regulatory authority and those of each of the previous three holders of this office. [22529/14]
Amharc ar fhreagraFollowing the passing of the Central Bank and Financial Services Authority of Ireland Act 2003, the Central Bank of Ireland was re-structured and re-named as the Central Bank and Financial Services Authority of Ireland. Under this Act the supervision of all financial institutions operating in Ireland was consolidated under an autonomous body - the Irish Financial Services Regulatory Authority (IFSRA) - which was established within the Central Bank. The 2003 Act also created the position of Chief Executive Officer of the IFSRA.
Since the financial crisis a whole series of reforms have been introduced to underpin a more effective and efficient financial regulatory regime. The Central Bank Reform Act 2010 gave effect to significant structural changes in the operation of financial regulation in Ireland which, inter alia, provided for the dissolution of the IFSRA and the abolition of the post of Chief Executive of the Regulatory Authority. The Central Bank is now a single fully-integrated structure with a unitary board, the Central Bank Commission. The 2010 Act created two statutory posts, a Head of Financial Regulation and a Head of Central Banking.
The current Head of Financial Regulation, or Deputy Governor (Financial Regulation), is Cyril Roux. Mr Roux was appointed as Deputy Governor (Financial Regulation) of the Central Bank of Ireland in October 2013. He is responsible for all regulatory activities in the Central Bank including prudential, conduct of business and markets supervision of financial services companies in Ireland. He is one of three executive members of the Central Bank Commission and is a member of the Supervisory Board of the Single Supervisory Mechanism (SSM).
Prior to joining the Central Bank, he was First Deputy Secretary General of the French resolution and supervisory authority (ACPR) where he oversaw the prudential supervision of half of the credit institutions, including specialised mortgage lenders and foreign banks, the prudential supervision of most of the insurance and reinsurance sector, international affairs and accounting. Prior to joining the ACPR, he was the Deputy Secretary General of the French insurance supervisory authority (ACAM). He also spent 10 years at AXA Insurance in a variety of posts.
He holds a PhD in Economics from Harvard University. He is a graduate of Ecole Polytechnique (France) and a member of the French Institute of Actuaries. He earned a bachelor's degree in Literature, summa cum laude, from the University of Paris - Sorbonne.
Prior to Mr Roux, the position of Deputy Governor Financial Regulation was held by Matthew Elderfield.
Prior to taking up his position at the Central Bank of Ireland, Mr Elderfield was Chief Executive of the Bermuda Monetary Authority (BMA) from 2007-2009, with responsibility for supervision of all financial services companies in Bermuda, including the third largest global reinsurance centre.
Prior to joining the BMA, he spent eight years at the UK Financial Services Authority (FSA) as a Head of Department in a variety of posts, responsible for exchange and clearing house supervision, for secondary markets and listing policy and for banking supervision.
Before joining the FSA, he established the European operations of the International Swaps and Derivatives Association (ISDA) and held posts at the London Investment Banking Association, the British Bankers Association and a Washington-DC based consultancy firm.
In March 2011, he was appointed as an Adjunct Professor at University College Cork.
He graduated from Cambridge University in 1988 with a Masters degree in International Relations, and earned a Bachelors degree in Foreign Service, cum laude, from the School of Foreign Service, Georgetown University in 1987.
Prior to Mr Elderfield, the position of Chief Executive of the Financial Regulator was held by Patrick Neary.
Mr Neary was appointed to the position of Chief Executive of the Financial Regulator in February 2006. Prior to this, he held the position of Prudential Director of the Financial Regulator from 2003. In this role his responsibilities included the protection of consumers' deposits, funds and policies.
He is a fellow of the Chartered Association of Certified Accountants (FCCA). He was previously Head of Securities and Exchanges Supervision and Deputy Head of Banking Supervision in the Central Bank of Ireland. He began his career in 1971.
Prior to Mr Neary, Liam O'Reilly was the first person appointed to the post of Chief Executive of the Financial Regulator in 2002. Mr O'Reilly had been Assistant Director General of the Central Bank of Ireland since 1998, with responsibility for all of the Central Bank's financial supervision functions.
Outside of this supervisory role, he had previously held the positions of Manager of the Central Bank's Financial Control & Settlements Department, Markets Department and International Relations Department. He was a member of the ECB Banking Supervision Committee, the EU Banking Advisory Committee, the Committee of European Securities Regulators and the International Organisation for Securities Commissioners. He holds a M.Sc. in Economics and Statistics and a Ph.D. in Econometrics from Trinity College Dublin.
111. Deputy Pearse Doherty asked the Minister for Finance his views on the announcement by a Delaware court on 13 May that the liquidators of the Irish Bank Resolution Corporation have to set aside millions of euro to cover a racketeering claim. [22532/14]
Amharc ar fhreagraI have been advised by the Special Liquidators that action in the US Bankruptcy Court by John Flynn to prevent the sale of IBRC loan assets has been unsuccessful, allowing the sales by the Special Liquidators to proceed to completion.
The Court has requested that the Special Liquidators set aside an amount of $36 million for a period of 60 days to allow the Flynn parties an opportunity to seek a stay on the order for recognition granted to the Special Liquidators by the US Courts pending an appeal. The Special Liquidators are happy to comply with the Court's request and Counsel for John Flynn confirmed that the amount set aside is not connected to the racketeering claim.
112. Deputy Michael McGrath asked the Minister for Finance if persons (details supplied) in County Tipperary are entitled to tax relief at source on mortgage interest in respect of the amount of their mortgage drawn down in 2012; and if he will make a statement on the matter. [22540/14]
Amharc ar fhreagraIn order to qualify for mortgage interest relief (MIR), a loan must have been drawn down and used in the purchase, repair or development of an individual's principal private residence on or before 31 December 2012. On this basis, any funds drawn down on a date later than 31 December 2012, do not qualify for the relief. However, Section 9 of the 2013 Finance Act provides for extended entitlement beyond the 31 December deadline in circumstances where all of the required qualifying conditions are met.
The qualifying conditions are:
- The loan must have been taken out between 1 January 2012 and 31 December 2012,
- A portion of the loan must have been used to purchase a site in 2012,
- The balance of the loan must be drawn down and used to construct a dwelling on that site in 2012 and 2013.
- Any necessary planning permission must have been in place prior to 31 December 2012.
Regarding the case to which the Deputy refers, Revenue has confirmed to me that the site in question was not purchased by the claimants during 2012, thereby 'disqualifying' the funds drawn down after 31 December 2012 from entitlement to MIR. Revenue has also confirmed to me that while the claimants are not entitled to MIR in respect of the portion of the loan drawn down after 31 December 2012, they are in receipt of MIR in respect of the portion of the loan drawn down in December 2012. This entitlement will continue up to 2017 as currently provided for under the legislation.
113. Deputy Eoghan Murphy asked the Minister for Finance if he is considering adopting a similar approach to the UK in its implementation of a recent mortgage market review that aims to place more responsibility on mortgage lenders and prevent the development of poor lending practices. [22541/14]
Amharc ar fhreagraMortgage lending decisions must be undertaken on a sustainable and prudential basis by financial institutions and must conform fully with the regulatory requirements, both in relation to the financial institution itself, and also with regard to the safeguarding of the borrower's interests. The Central Bank of Ireland (CBI) has advised me that the Consumer Protection Code 2012 (CPC) contains important protections for borrowers, by imposing 'Knowing the Consumer and Suitability' requirements on lenders. Lenders are required to assess affordability of credit based on the individual circumstances of each borrower.
The CPC contains provisions relating to assessing suitability and affordability of credit, including for example, a provision which obliges lenders to carry out an assessment of affordability to ascertain the personal consumers likely ability to repay the debt over the duration of the agreement. The affordability assessment must include, inter alia, a test on the basis of a 2% interest rate increase, at a minimum, above the current interest rate offered to the personal consumer.
The CBI has also published internal sustainability guidelines in June 2013 (updated in Sept 2013) which sets out important factors to consider when assessing if modifications proposed by a lender are sustainable solutions for mortgages arrears cases. Included with the guidelines the CBI has set out its expectations in relation to the assessment of borrower affordability of sustainable solutions. Affordability needs to be based on both their current and prospective future servicing capacity for all borrowings. According to the guidance, assumed prospective future increases in the debt servicing ability of the borrower must be credible and conservative.
114. Deputy Finian McGrath asked the Minister for Finance if he will assist families with their efforts in acquiring a mortgage (details supplied); and if he will make a statement on the matter. [22657/14]
Amharc ar fhreagraAs Minister for Finance, it is not appropriate for me to become involved in individual cases. The decision on the approval of a mortgage for a borrower is a commercial decision for the lending institution concerned. It is important that each lending institution is allowed to properly and independently assess the risks that it is considering when deciding whether to approve a loan.
The Central Bank of Ireland (CBI) has advised me that Chapter 5 of its Consumer Protection Code contains provisions relating to assessing suitability and affordability of credit, including for example, a provision which obliges lenders to carry out an assessment of affordability to ascertain the personal consumer's likely ability to repay the debt over the duration of the agreement. The affordability assessment must include, inter alia, a test on the basis of a 2% interest rate increase, at a minimum, above the interest rate offered to the personal consumer.
My Department is committed, under the 'Construction 2020' strategy, to examine the concept of a mortgage insurance scheme. The objective of any scheme would be to ensure adequate availability of mortgage finance on affordable terms for new completions, particularly for 'First Time Buyers'. In doing so I would aim to provide the certainty needed to support greater levels of investment in new housing, with the associated benefits for the construction sector and ultimately for the consumer. Once this examination has been completed and presented to me I will consider the next steps.
115. Deputy Olivia Mitchell asked the Minister for Finance if he will confirm that mortgages sold to Lone Star will be covered by the code of conduct for mortgage arrears and any future enactment of it if Lone Star sells on the loans; and if he will make a statement on the matter. [22668/14]
Amharc ar fhreagraThe Government is keenly aware of the concerns raised by the Central Bank and others regarding the potential loss of protection under the Code of Conduct on Mortgage Arrears (CCMA). The Government is committed to bringing forward legislation that will protect mortgage holders and believes the sale of loan books to unregulated third parties Bill is the most effective way to address the issue in a comprehensive manner. The legislation will ensure the protection of the CCMA or any replacement code in the future will continue to apply to mortgages which are sold to unregulated financial service providers.
In the interim the Government has always been clear that we fully expected that any purchaser of the IBRC mortgage portfolio would service the loan books in accordance with the CCMA. The two purchasers of the IBRC residential mortgage loans to date, Loan Star and Oaktree, have both committed to servicing these books in accordance with the terms of the Central Bank's code of conduct on mortgage arrears, CCMA.
116. Deputy John Lyons asked the Minister for Finance if a VAT waiver exists for renovation works on State-owned properties, such as those that have been leased out to groups for community use and are in the ownership of the Office of Public Works. [22677/14]
Amharc ar fhreagraI am advised by the Revenue Commissioners that renovation works carried out on properties are liable to VAT regardless of the owner of the property. In this case, where a public body engages a contractor to carry out renovation on their property, the renovation is liable to VAT at the 13.5% reduced rate. However, where a public body, or any landlord, had opted to charge VAT on a letting, they have a commensurate right to recover VAT incurred on goods and services used for the purposes of the taxed letting, including any VAT incurred on property renovation. However, if the letting is not taxed, the public body has no right to recover the VAT charged on any renovation works.
In the case where community groups engage contractors to undertake renovation works, as stated earlier, such work would be liable to VAT at 13.5%. In general, community groups would not have an entitlement to recover such VAT incurred. This is because supplies by community groups, such as the provision of childcare facilities, are in general exempt from VAT. This means that they do not register for VAT, do not charge any VAT on their supplies and consequently cannot recover VAT incurred on goods and services used for the purposes of their VAT exempt supplies.
117. Deputy Seamus Healy asked the Minister for Finance the monetary amount at current share values by which the equity in Bank of Ireland held by the State was reduced due to the share placing by Bank of Ireland used to raise the money required to purchase the preference shares of the State in recent months; and if he will make a statement on the matter. [22694/14]
Amharc ar fhreagraAs I stated in a recent Parliamentary Question, the State did not participate in the private placing in December 2013 which was part of the package to repay in full the State's investment in the Bank of Ireland Preference Shares. Therefore, the total number of shares of c4,512m held by the State prior to the placing remained unchanged following the placing. For the benefit of the Deputy, I set out the value of the State's shareholding both before and after the placing as well as today:
|
Date |
- |
Share price* |
Value of State's BoI equity investment |
|
3rd Dec 2013 |
Day before placing |
26.9 |
c€1.214bn |
|
4th Dec 2013 |
Day of placing |
26.2 |
c€1.182bn |
|
23rd May 2014 |
Most recent closing price |
27.8 |
c€1.254bn |
*Source: Irish Stock Exchange closing prices
