Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

As I have said previously, it would not be appropriate for me to comment on media speculation about foreign-owned banks. However, what I can say is that both I and my European counterparts have been working steadfastly since the financial crisis to bring about strengthened oversight and resolution regimes to address any emerging vulnerabilities or instabilities in the European banking sector.

The entire landscape has changed utterly, characterised by the presence of new European institutions, strengthened regulations, a more intrusive supervisory approach and a new focus on macroprudential requirements.

New European regulations have strengthened controls over the banking system and have resulted in an overhaul of regulation, supervision and resolution regimes. The capital requirements regulation and directive, which came into force in 2014, brought about significant enhancements in the quality and quantity of capital that banks are required to hold and the setting of minimum liquidity requirements.

The banking recovery and resolution directive and the single resolution mechanism have transformed the framework for dealing with failed banks and are designed to provide a financial safety net and a means of recovery and resolution with minimum disruption to the sovereign.

The single supervisory mechanism, SSM, is now responsible for the prudential supervision framework for euro area banks. The central piece of the SSM supervisory process is the supervisory review and evaluation process, under which the ECB-led joint supervisory teams inspect business models, internal governance, profitability and banking risks.

All these new regulations and institutional arrangements have been designed to address the challenges of banking oversight and resolution at a European level and provide for a proactive approach towards systemic and emergent risks at European level.

Besides the introduction of new European and national regulations, the Central Bank too has increased its resources and has become more proactive in addressing systemic risk. Of course cross-border bank linkages warrant ongoing attention by the new EU supervisory structures and by the Central Bank. I assure the Deputy that the Department and the Central Bank are continually monitoring international developments in collaboration with our European colleagues.

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