Alan Kelly demands answer drom Europe on AIB
17 October 2010
Labour MEP, Alan Kelly, will be writing to EU Competition Commissioner, Jauquin Almunia, to ascertain why the Commission gave Allied Irish Bank the all clear in July, only for the bank to require further billions earlier this month.
"This is a question we must simply get to the bottom of. On July 23rd, the European Commission stated that Allied Irish Bank would no longer require any more of the Irish taxpayer's money as it was strong enough to survive the 'stress test' they put on the bank.
"However less than three months later, Brian Lenihan announced that he would be allocating approximately three thousand million euro of future Irish pension funding to keep AIB capitalised. The institution now is all but nationalised but was given a clean bill of health barely three months before. It is questionable whether the bank will ever be in a position to re-pay the Irish taxpayer.
"The failure of Europe to anticipate this development is very concerning. We are at the stage now where we are relying on Europe to get us through these banking difficulties and we as a country need them to see through the spin being created by both the bankers and the government.
"We have already seen the Commission thwart the government's plans for Anglo Irish Bank, because they were nonsense. They have played a critical role in keeping Ireland a credible country on financial markets.
"However, the fact that AIB passed the stress test by the Commission raises many questions.
1. Was the bank giving the government and the Commission truly accurate assessments of its projected losses? What kind of tests were applied to AIB's loan books? For example, did they factor in this any projected NAMA discounts to the AIB loan book which should have been known?
2. Was the Commission's stress test really a stress test or was it designed to inject some positive sentiment in the European markets?
3. With the Irish taxpayer already being bled dry by the banks, can the Commission be certain that no further capital will be required? Will they publish detailed assessments of how they came to their conclusions?
"The Irish people need answers to these questions. We are at the stage where we are relying on Europe even more so than the Irish government to get us out of this mess and clear communication from Europe is essential.
"If it is the case that the Commission were presented with an overly optimistic set of figures from the banks, then they failed in their duty to critically analyse them. Furthermore, a significant haircut from NAMA loans should have been easy to predict and been factored in to their decision. In time it has proven to be the wrong decision and the taxpayers are paying again.
"The Commission has a case to answer and I intend to pursue it with them."