Paul Coghlan (Fine Gael) | Oireachtas source

I warmly welcome the Minister and I thank him for his extensive overview of this legislation. As he has said, the Bill before the House has just two purposes. First, it extends Part III of the Central Bank Act 1971 to ensure the business, assets and liabilities of building societies can be transferred to banks. As things stand, they may be transferred to other building societies only. It is a necessary measure because the ICS is the only remaining building society. Second, the Bill makes provision for certain payments to be made from the Central Fund to an account established by the European Stability Mechanism on behalf of euro area member states. The manner in which this will be done in order to assist Greece has been dealt with extensively by the Minister.

The essence of this aspect of the legislation is to extend the application of Part III of the Central Bank Act 1971 from its current application, whereby it applies to banks only, so that it will also apply to building societies. There is no building society other than ICS, which I have mentioned and which is owned by the Bank of Ireland. In July 2013, Bank of Ireland agreed an amendment to its restructuring plan which had been agreed with the European Commission in respect of the State aid it had received. This amendment allowed the bank to retain its life assurance subsidiary, New Ireland Assurance Company, and facilitated other arrangements. Bank of Ireland has until 30 June 2014 to execute its commitment in that regard.

Part III transfer schemes have been used successfully on many occasions. As I have said, this legislation is not available to building societies because it is limited exclusively to banks. The amendments proposed in this Bill will bring building societies within the scope of the existing provisions that apply to banks. I think that is very proper. Any transfer of assets and liabilities pursuant to the 1971 Act is subject to the approval of the Minister, as he has outlined, after consultation with the Central Bank. If this legislation is enacted, it is anticipated that the ICS will apply, pursuant to Part III of the 1971 Act, to transfer of the bulk of its assets and liabilities to Bank of Ireland. It is expected that an onward transfer of some of those assets and liabilities to a third party would subsequently be effected. This onward transfer could include up to €1 billion of the €6 billion mortgage book held by the ICS.

The restructuring plan that has been agreed between Bank of Ireland and the European Commission requires the Commission to approve the purchaser of the ICS platform. The primary purpose of this condition in the restructuring plan is to encourage competition in the mortgage intermediaries market. The Minister referred to that in great detail. We can take comfort from the assurance given by the Minister in his speech that he will introduce legislation to protect mortgage holders. As he has said, consultation on that legislation is ongoing with the Central Bank and the Office of the Attorney General. I accept fully his assurance that this measure will be in the best interests of consumers and the public.

The second purpose of the Bill is to introduce measures to facilitate the provision of assistance to Greece under an account that has been set up by the ESM on behalf of the euro area member states. This measure is necessary because, as the Minister has outlined, the next transfer date under that arrangement is 1 July 2014. I have nothing further to add. The Minister has been quite comprehensive. I commend the Bill to the House.