Refund rules may cost the Exchequer €500 million

THE Exchequer could lose out on bank payments worth at least half-a-billion euro next year after the European Commission imposed strict new rules on how AIB and Bank of Ireland will refund the Government, Fine Gael’s finance spokesman Richard Bruton has warned.

His claim follows a statement to the markets yesterday by AIB, one of the country’s two major banks, that the commission has instructed that it “should not make coupon payments on its Tier 1 and Tier 2 capital instruments unless under a binding legal obligation to do so” while the commission is assessing the bank’s restructuring plan.

Mr Bruton called on Finance Minister Brian Lenihan to immediately clarify how taxpayers can expect a return from the €7bn billion Fianna Fáil has poured into the two main banks consisting of €3.5bn in each for a 25% equity stake, following this latest development from Brussels.