The European Central Bank has released the results of the Comprehensive Assessment for over 130 banks throughout Europe. Finance Minister Michael Noonan stated:
The Comprehensive Assessment was a strict and comprehensive examination of the European banking system and the results for the Irish banks highlight the strength of the banking system and the significant progress that has been made since 2011.
The results show that the three banks into which the Irish taxpayer has invested had sufficient capital at the end of 2013 to meet the Asset Quality Review and the baseline stress scenario. Under the adverse stress scenario again both AIB and Bank of Ireland were sufficiently capitalised, however, Permanent TSB showed a capital requirement. This will be fully addressed by its Capital Plan which will include a third party capital raise to be executed in the first half of 2015.
The release of these results should be supportive of the value of the State investments in Allied Irish Banks and Bank of Ireland.
The positive results for AIB are an important milestone and acknowledge that the bank is well capitalised. These results will allow my officials to move to the next phase of crafting our plans to return some of the large investments made between 2009 and 2011 to the taxpayer.
I note and welcome that Merrill Lynch International Bank and Ulster Bank had sufficient capital under the Comprehensive Assessment.
Permanent TSB has made strong progress since the new management team was appointed in 2012. The results of the Comprehensive Assessment demonstrate that as at 31 December 2013 Permanent TSB was well provisioned for the risks in its balance sheet at that point in time and that it has sufficient capital for the baseline stress test scenario set out in the Comprehensive Assessment.
Encouragingly we have seen positive economic data in Ireland in late 2013 and in 2014 and Permanent TSB has made significant progress towards returning to profitability in 2014. In line with the requirements of the Comprehensive Assessment, Permanent TSB will submit a Capital Plan to the SSM detailing the deleveraging which was completed in 2014, demonstrating how it will generate capital internally and, to the extent required, raise capital from third party private sources within the timeframes set out by the SSM. I am aware of the significant work already undertaken by Permanent TSB on the Capital Plan.
I am supportive of Permanent TSB’s plans to raise capital from private investors given the taxpayers investment in the bank, the importance of the bank to the economy, its customers (performing and non-performing) and its 2,200 staff. My officials will review any proposals made by Permanent TSB and will work with Permanent TSB and other stakeholders to ensure a successful execution of the Capital Plan in 2015.