Thursday, 8 March 2012
Dáil Éireann Debate
69. Deputy Michael McGrath asked the Minister for Finance the position regarding the planned recapitalisation of Irish Life & Permanent; the proposed restructuring of the group; if he intends to put €1.3 billion into Irish Life & Permanent by June 2012; and if he will make a statement on the matter. [13359/12]
Minister for Finance (Deputy Michael Noonan): As a result of the March 2011 PCAR Irish Life & Permanent (IL&P) was required to raise additional capital of €4 billion. In July 2011 €2.3 billion of this requirement was injected by way of a placing of shares to the Minister for Finance, leaving the State with its current holding of 99.24% in IL&P. At that time a further €400 million was also injected into IL&P in return for the issue of a Contingent Capital Note to the Minister bringing the total State contribution to €2.7 billion. During 2011 a further €0.2 billion was met from internal IL&P resources.
While the company also completed a liability management exercise which generated additional core tier 1 capital this did not improve the bank’s overall capital position due to the existing capital treatment of its investment in the subsidiary Life Company. After all of these actions the remaining capital requirement for the company is €1.3 billion. It was previously intended that this remaining capital requirement would be satisfied on completion of a successful disposal of the Group’s life assurance subsidiary Irish Life, with any shortfall from the €1.3 billion outstanding capital requirement being provided by the State.
The recent Memorandum of Understanding (“MOU”) dated 10 February 2012, which has been agreed with our External Partners states that the recapitalisation of IL&P will be completed by end-June 2012. The MOU also confirmed that, following the suspension of the sale of Irish Life, it has been decided that a State acquisition of the company would be the most effective mechanism to complete the recapitalisation and ensure that the separation of IL&P and Irish Life that is already well-advanced is completed. This approach was approved by Government at its meeting on 6th March 2012 and it is expected that the acquisition will be completed as planned by end June 2012.
Irish Life is a valuable asset for the State and will continue to be managed on an independent commercial basis to ensure that value is maintained. We will continue to work to dispose of Irish Life when market conditions permit. In relation to the proposed restructuring of IL&P t/a Permanent TSB, as part of Memorandum of Understanding dated 10 February 2012 it was also agreed that the authorities will make a decision on the proposed way ahead for the company by the end of April 2012. It would be premature for me to discuss possible outcomes at the present time.
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