Thursday, 17 January 2013

Dáil Éireann Debate
Vol. 788 No. 2
Unrevised

First Page Previous Page Page of 72 Next Page Last Page

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty The sale of these CCNs, contingent capital notes, was kept very quiet and only announced several hours before it was completed. At €1 billion, this is the largest sale of a State asset this year and should be subject to proper scrutiny. The Minister gave many figures in his reply. It is clear from this and replies to other parliamentary questions that there has been a substantial reduction in returns on the notes to the Exchequer. One figure the Minister suggested is that the Exchequer will be down €18 million this year and €64 million next year as a result of this sale of CCNs. Many will ask how could we have lost such amounts and still announced it as a good development.

There is the question of who is the buyer of this CCN. If it were to be converted to capital, what percentage of the bank would the owner or owners have? There is also the question of who managed this sale. The Minister stated the shareholder management unit in the Department of Finance managed this. I do not want to cast any aspersions here but the head of that unit is Michael Torpey. While I wish him well, Michael Torpey will be Bank of Ireland's chief executive of its corporate and treasury division. There is a genuine question there without casting any aspersion on anyone-----

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett Be careful now.

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty I have made it clear the reason I have raised this-----

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett I would prefer if names were not mentioned.

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty The Minister actually welcomed this transfer yesterday.

Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan Yes, but not in the House.

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty He mentioned it in public. I am not casting any aspersions on the individual in question.

Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan The issue is about naming people in the House.

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty I am not casting any aspersions but a genuine question arises when someone who heads up the management-----

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett Will the Deputy put a question because we are over time?

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty When the person who headed up the management unit which dealt with the sale of these CCNs becomes a chief executive of the very same bank's unit dealing with similar issues and given the Government's commitment to a programme-----

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett There is an implication there, Deputy, and it is wrong in this House.

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty No.

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett It is wrong and it is not in accordance with Standing Orders. It is as simple as that. Will the Deputy please allow the Minister to respond?

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty There is a programme for Government commitment to allow for a cooling-off period for senior departmental officials transferring to the private sector. Will the Minister reassure the House there are no questions concerning this appointment?

Will the Minister also explain why this is such a good deal when our Exchequer position is worse as a result of this transaction?

Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan The State has no interest in owning or operating banks. It was because of the catastrophic situation in which we found ourselves that the State had to put capital into the banks and take a shareholding in them. It has always been the policy to recover the taxpayers' money in so far as we could. Up to €1 billion was put into CoCos, contingent capital notes, and we recovered it in full in accordance with that policy. The taxpayer has lost nothing and has, as a matter of fact, gained €10 million on the transaction.

Regarding the issue of the coupon, in any investment one measures risk by the interest rate charged. I mentioned the investment and the ESM, European Stability Mechanism. The reason one had to pay a small commission to get into that mechanism was because there is no risk to one's money. The reason one gets 10% on CoCos is because there is a very significant risk. If the capital holding in the bank were to decline below 8.5%, the CoCos get automatically transferred into equity. As soon as that happens, bad debts can burn it up. One can lose one's full capital as a result. That is why one gets 10%. The interest rate always measures risk. The lower the interest rate, the lower the risk. The higher the rate, the higher the risk.

In my judgment, it was a good idea to take the taxpayers' money out in full even though if we continued with the risk, there would be an annual yield. That was my judgment call. Other people can argue it other ways but I believe the taxpayer has had enough of risk over the years. If I can get money out at par through preference shares or CoCos – there is quite a lot of them through the system – I will sell at par. That is because any arrangement we can get from Europe, I do not believe we will get it at par.

Deputy Sean Fleming: Information on Seán Fleming Zoom on Seán Fleming I understand it was a judgment call. What are the budgetary implications for 2013 of not having the income from this source?

Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan It comes to between €17 million and €18 million.

Deputy Sean Fleming: Information on Seán Fleming Zoom on Seán Fleming That is a serious figure and I hope social welfare recipients, medical card holders or home helps will not be paying for that next October.

Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan We are okay. We have it well covered under the December returns.

Deputy Sean Fleming: Information on Seán Fleming Zoom on Seán Fleming Presumably the initiative for this came from Bank of Ireland as it is in its interest to get the State out of its realm as much as it is the State's. Did Bank of Ireland do most of the running in this sale?

Last year the Minister for Public Expenditure and Reform made a big play that he had got a commitment from the troika that 50% from the proceeds of the sale of State assets could be used for job creation and investment purposes. Is half of the money from the sale of the CCNs going into this fund or will the full €1 billion be taken off the national debt? If it is going against the national debt, why is 50% not being used for job creation?

Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan This was borrowed money which was put into recapitalising the banks as part of contingency funding in case the banks needed it. As I explained, there was a high risk so there was a 10% coupon on it. It has been the Government's decision that any moneys got from the sale of assets in the banks will be used to reduce the debt because that money was always borrowed. We cleared the debt with the sale of the asset.

On the issue of the official to which Deputy Pearse Doherty referred, he went on holidays to Australia on 14 December and did not return until last week. In accordance with normal practice, he will not take up duty in the banks for another two months. There is a kind of cordon sanitaire for three months so there is no conflict of interest in the way this was operated. It is a general policy to reduce the borrowed moneys put into the banks by the taxpayer.

Corporation Tax

 8. Deputy Mick Wallace Information on Mick Wallace Zoom on Mick Wallace asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan his plans to progress discussions on the common consolidated corporate tax base during the EU Presidency; and if he will make a statement on the matter.  [1929/13]

Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan On 16 March 2011, the European Commission, which has the right of initiative to bring forward legislative proposals, published its proposal for a common consolidated corporate tax base, CCCTB. This represented the beginning of a process that involves a detailed examination of the proposal, line by line, by all member states at the Council working group. Since the Commission's proposal has been published, Department of Finance officials, along with officials from the Revenue Commissioners, have been attending the working party on tax questions which is the forum for discussions on the proposal. To date, officials have attended meetings on a regular basis on the proposal and there is still a long way to go before agreement on the Commission's proposal could be expected. The Cypriot Presidency completed a first read-through of the proposal in that member states have had the opportunity to give their initial views and ask questions, but no legislative re-drafting has occurred.


Last Updated: 05/03/2014 12:16:30 First Page Previous Page Page of 72 Next Page Last Page