UK Chancellor: “Making the loan has enabled us to set that condition and to be part of the discussion…”

As the UK’s Loans to Ireland Bill passes on to the House of Lords for a second reading – debate here – the BBC’s Robert Peston notes that

The interest rate on the £3.25bn being made available in eight lumps over the next three years will be 2.29% above the cost for the British government of borrowing for seven and a half years.

Which means that a profit is more or less guaranteed for Britain.

George Osborne today estimated that profit at £440m in fees and interest over the 10 years until we get all our money back.

And, as the Irish Times reports, there are conditions attached

British chancellor of the exchequer George Osborne said the loan agreement struck with the Department of Finance in Dublin just hours before the legislation came before the Commons contains the “crucial condition” that “no amendments to the restructuring plan that would have a material adverse financial impact on the UK operations” of the three banks will be made.

“Given the scale of those banks’ operations in the UK, that second condition is significant, and it shows in a practical way why I believe it was right for us to provide the loan.

“It allows us to have a say in a restructuring plan that could otherwise have had a major impact on the UK and its banking system, and could potentially have cost the British taxpayer considerable sums of money without our voice even being heard.

“Making the loan has enabled us to set that condition and to be part of the discussion about the restructuring plan and its impact on the UK subsidiaries of banks which have significant presences in Northern Ireland.  [added emphasis]

“I know that there is concern about the potential impact of the plan on jobs and the availability of credit in Northern Ireland, and, indeed, about its potential impact throughout the UK, given that Bank of Ireland owns the Post Office card account,” said the chancellor.

Pete Baker