Michael Noonan (Limerick City, Fine Gael)

Recovery and resolution plans allow the Central Bank and authorised credit institutions to identify possible actions that could be taken where an institution is experiencing difficulties. Such plans are prepared in advance of any difficulties and facilitate contingency planning by the institution and the Central Bank. The recovery plan is prepared by the institution and submitted to the Central Bank for assessment. It outlines the actions that an institution could take to address possible difficulties. The resolution plan is prepared by the Central Bank on the basis of the information received from the institution and sets out the Central Bank's contingency plans for the resolution of the institution concerned.

The preparation of such plans should facilitate speedy action by the institution and the Central Bank if any difficulties actually arise as a plan of action will already have been prepared. Where a special manager is appointed, he or she may be tasked with implementing a recovery plan for the institution. That is the general position of happens between the bank and institution. The bank and institution as a matter of routine rather than when a storm blows put in place contingency plans.

The Bill, in terms of focus, has implications for credit unions, including credit unions that are failing or are likely to fail. There is a broader but separate question in regard to the structure of the credit union sector in the future. This incorporates issues such as consolidation, hub and spoke arrangements and shared services, on which the Senator touched. The Senator will be aware that the Commission on Credit Unions interim report, published last week, makes recommendations to the Minister on credit union regulations, governance and stabilisation among other things. The next phase of the commission's work will deal with restructuring. I mentioned on the last occasion I was in this House that the commission is continuing its work and that we expect a final report some time around Easter, which report deals with the restructuring of credit unions. The commission will make recommendations on the possibility of voluntary consolidation or restructuring of the credit union sector over time, recognising the need to maintain local presence and taking into account the not-for-profit mandate, the volunteer ethos and community focus of credit unions. The commission will have due regard to the need to protect depositors' savings and financial stability.

The Central Bank's proposals on the possible restructuring of some credit unions will be examined by the commission and recommendations will be made to me. There is no intention to rush. The next step will see the Central Bank putting its restructuring plans before the commission, which will analyse and study them and, as a result of this information, make recommendations in its final report.

The commission will examine the option for groups of credit unions to share services on a formal basis. It will also examine the extent to which this model is appropriate. It will consider which services are most suitable for delivery by a separate entity, for example, purchasing, auditing, compliance, credit control, legal services, marketing, human resources management, administration and training. Progress in the introduction of modern information technology and management information systems in credit unions will also be examined. The process is well under way and we have had the interim report.

The next part of the commission's work is an examination of restructuring. One will not wake up some morning and find that the bank has moved in on credit unions. It is being processed through the commission and there will be a full report that we can discuss in or around Easter. The only exception to this is if a credit union, for reasons about which we are not currently aware, is on the verge of collapse and the bank must move as a matter of emergency. The restructuring of the credit union as a whole will be filtered through the commission and the commission's advice will be taken on board.