Today Bank of Ireland announced a plan to return €1.8 billion to the State. This is welcome and I hope that the Tánaiste and his Government put the money to good use. However, as we get ready to take this money back, we must be cognisant of where some of it has come from. Some of it has come from citizens whose lives have been ruined by the behaviour of Bank of Ireland. Of the banks that have appeared before the Oireachtas Committee on Finance, Public Expenditure and Reform, Bank of Ireland is unique in refusing to offer 0% interest on the portion of a mortgage in distress that is shelved. It is the only bank that has refused to do that. At a meeting of the finance committee in September of this year, I went through the so-called restructures that Bank of Ireland was offering with its chief executive. We went through 90% of them and he agreed, on the record, that in all of those cases, the borrowers would end up paying more money back to Bank of Ireland. This was true in at least 90% of cases, although I believe it is true of close to 100% of cases. For borrowers and families whose problem is too much debt, the Bank of Ireland solution is for those individuals and families to pay more money than they would have had they not got into difficulty.

When I speak to practitioners who are working very hard every day to try to help families and individuals to restructure their mortgages, I often ask them if there is any bank that is doing everything it can not to act according to the spirit of the what the Government has asked for. I hear the same response every time - Bank of Ireland, Bank of Ireland, Bank of Ireland. Families all over Ireland with unsustainable debts are in a banking lottery. Those who were unfortunate enough to do business with and to trust Bank of Ireland during the bubble are being squeezed harder than those who did business with other banks.

The Irish people made a lot of money available to Bank of Ireland and €1.8 billion of that was to deal specifically with residential mortgages. When Bank of Ireland representatives appeared before the aforementioned Oireachtas committee, their figures showed that they had made a provision for half of this amount on residential mortgages. In other words, they took the €1.8 billion because they acknowledged that they would not get back about half of the money they were owed from distressed mortgages. Rather than act as the Government has asked, Bank of Ireland's explicitly stated policy is that it will not engage in any debt write-downs. Practitioners are telling me that Bank of Ireland drags its heels at every opportunity.

Does the Tánaiste believe it is acceptable for Bank of Ireland to be acting in this way? If he does not believe it is acceptable, what tangible measures can his Government take to stop it?

The Minister for Finance, on behalf of the State, has concluded negotiations on the sale and redemption of preference shares in Bank of Ireland. This transaction will see the State recouping a premium on the initial €1.837 billion investment. A press release was issued this morning to mark the start of the sale process. The sale and redemption processes are currently under way and the exact return to the State will depend on the outcome of the two separate capital market book-build exercises that form part of these processes. As the process is currently under way, I am limited in what I can say at present. However, I am sure that when the process is concluded, the Minister for Finance will come to the House and update Members fully.

The process involves the sale of €1.3 billion of the preference shares to private investors and the redemption of €537 million of the preference shares, which will be financed by the bank through the placing of new equity. The successful conclusion of this transaction will see the State exiting its €1.837 billion preference shares held in Bank of Ireland at a profit, build further confidence in Ireland's recovery and strengthen our return to normal market funding. I acknowledge the welcome that Deputy Donnelly has given to that process.

Regarding the ongoing engagement between banks and individual borrowers and families with mortgage difficulties who are seeking a way out, the Central Bank has set targets for each of the banks to conclude agreements with those in mortgage distress. We have put a range of measures in place, including new legislation providing for the personal insolvency service and non-judicial debt settlement arrangements. We have also made it very clear to all of the banks that we want to see a conclusion brought to the mortgage distress and debt difficulties that many families are in. That must be done, as I have said repeatedly, on a case by case basis. We continue to engage with the banks, through the Central Bank, on what they are doing. We will continue to have that engagement with them because we want to see families lifted out from beneath the burden of debt. That is a process that we want to see accelerated. We want to see all of the banks engaged in it. No individual bank should be holding back or taking an approach which is less than one of full engagement.

I thank the Tánaiste for his reply. The targets, while well-meant, are being gamed by all of the banks. We know from the finance committee hearings in September that the way they have met the targets is by issuing tens of thousands of legal letters offering to evict people from their homes. The Central Bank has colluded in this by accepting that a threatening legal letter counts as a genuine offer of long-term restructuring of a mortgage.

Shame.

I welcome the Tánaiste's statement that no bank should be seen to be holding back. The reality is that one bank, at least, is - namely, Bank of Ireland.

Shame again.

It is not acting irrationally because it is the job of the board and its executives to make the bank as much money as possible. A bank makes money by taking money in from people, giving them as low a rate of interest as possible on their deposits, lending it out while charging as high an interest rate as possible and then squeezing and squeezing as much as necessary to get that money back. That is the banking model.

I do not blame Bank of Ireland for acting the way it is. I wish it would act like the other banks, including the commercial banks, but the reality is that it is not. The bank’s executive team took a clear line, which is on the record of the finance committee, when it said it was not engaging in debt write-down. The practitioners on the street are saying it is dragging its heels. I welcome the Tánaiste's statement that no bank should be allowed to do this. However, we have a bank that is dragging its heels and publicly stating it will do other than the Government’s stated intention, which is debt write-down, as stated by the Minister for Justice and Equality, Deputy Shatter, during the debate on the insolvency legislation last year.

What is the Government going to do about this? There is solid evidence that Bank of Ireland is dragging its heels. This has a knock-on effect on families who have loans with the bank, who are being squeezed. What can the Government tangibly do about this in the coming weeks and months?

What are the public interest directors doing?

Sleeping at the wheel.

Deputy Donnelly used two phrases that registered with me. First, he described banks as acting rationally, and second, he said that this is the banking model. I disagree with him in this respect. I believe that was the banking model. That was the approach one would have expected from banks acting rationally. As he knows, and as we all do, when the banks were acting rationally in that way, they found themselves in a position in which they ended up having to come to the State for assistance.

They were not acting rationally.

We are in a situation, therefore, in which the banks, largely because of the commitment made to them and the fact that they were bailed out by the State using taxpayers’ money, have a community responsibility, a social responsibility - call it what one will. I believe that responsibility is in large part measured - Deputy Donnelly gave some of the figures earlier - by the amounts provided for the banks to resolve mortgage distress. They should get on and do that.

We have set targets through the Central Bank for the banks to deal with distressed mortgage holders. Deputy Donnelly asked how this will be complied with. We have engagement at government level through the Minister for Finance and his Department, on some occasions through the Economic Management Council, and the Central Bank will continue that engagement with the banks until we see the mortgage distress problem resolved.

There is also the degree of public accountability that is exercised through the Oireachtas finance committee. I commend the committee on its decision to bring the banks' representatives before it to ensure their public accountability. This is not just a matter that can be dealt with and discussed behind closed doors. This is a matter of public interest in which public moneys have been committed to the banks. It is only right and proper that they appear regularly before the finance committee to account publicly for what they are doing.