Cowen says report found banks in excess of capital requirements

TAOISEACH Brian Cowen told the Dáil yesterday that the joint board of the Central Bank and Financial Services Authority of Ireland had submitted to the Minister for Finance a report on the financial position of the six major institutions covered by the bank guarantee scheme.

"The Minister has met with the governor of the Central Bank, the Financial Regulator and PricewaterhouseCoopers (PwC) to discuss the report, which presents an analysis of the capital positions of the six institutions having regard to their loan book. The content of the report is, of course, commercially-sensitive, the details of which cannot be disclosed."

Mr Cowen said the report confirmed that all the institutions reviewed were in excess of regulatory capital requirements as of September 30th last, the date on which the guarantee scheme was announced by the Government. The report had demonstrated that under a number of stress scenarios capital levels in the covered institutions would remain above regulatory levels in the period to 2011.

"However, the Minister is aware that international market expectations in respect of capital levels in the banking sector have altered, and that meeting these expectations may be challenging, with consequences for the sector and the wider economy," Mr Cowen said.

"The Minister expects that the covered institutions will explore fully the potential for meeting these capital needs through raising private capital and the disposal of appropriate assets and [he] is, of course, keeping the matter under close review."

Fine Gael leader Enda Kenny insisted later that if taxpayers' money was used to recapitalise the banks it would have to support lending to viable businesses and not delinquent developers.

"My interest is in the protection of Irish companies and jobs," said Mr Kenny, who called for the advice of external advisers to the Government, which is costing the taxpayer €2 million, to be published, so that everybody could have confidence in the process.

"The 'wait and see' approach is not viable any more from this Government. Irish business and the jobs they support need the clarity and certainty a recapitalisation programme would provide, with the above terms and conditions applying," Mr Kenny added.

Minister for Finance Brian Lenihan told journalists that the Government was concerned that Irish businesses and consumers should have ready access to credit. Discussions would take place with the various institutions concerned to ensure that those lines of credit were available.

Mr Lenihan refused to be drawn on the issue of recapitalisation.

"I am not going to pre-judge those discussions at this stage," he said. "Every option has to be examined to ensure that an adequate line of credit is available to the Irish economy, to the businesses in the Irish economy and to the consumers in the Irish economy."

He insisted that the Government was keeping a close eye on the situation and would take whatever action was needed to ensure that the banks, as credit institutions, served the Irish people.

"We are not rushing into the banks like some governments in other countries without knowing precisely what the position is in those banks," he added.

Asked about contact with overseas investment, he said: "I am not prepared to enter into commercially-sensitive matters."

Informal approaches had, of course, been made, but these would be referred to the relevant institutions.