Pat Rabbitte (Dublin South West, Labour)
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Question 116: To ask the Tánaiste and Minister for Finance the guarantees the State offers to depositors with banks and financial institutions; if he has plans to review the level of protection available in view of the recent crisis (details supplied). [29588/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Irish deposit protection scheme is established under the harmonised arrangements set out in the EU Deposit Guarantee Schemes Directive 94/19/EC. The Directive currently provides for a minimum level of protection of €20,000 or 90% of the loss incurred by a depositor when a credit institution cannot repay funds, whichever is the lesser. The Exchequer or the Central Bank and Financial Services Authority of Ireland (CBFSAI) do not fund the scheme; it is funded by a levy of 0.2% on bank deposits.

The Ecofin Council, at its meeting on 9 October last, decided on a preliminary set of issues to be analysed and addressed following recent financial market developments. These include reviewing possible enhancements of the deposit guarantee schemes in the EU. This review is to be undertaken by the Commission and the EU's Financial Services Committee on which Ireland is represented. This review is to report by mid-2008. The work carried out on this review and its conclusions will be important inputs to the process of ensuring that arrangements to safeguard financial stability in Ireland continue to conform to international best practice standards.

It is always well to remember that sound prudential supervision aimed at ensuring the continuing solvency and liquidity of banks provides the best protection for depositors. Ireland prides itself in matching best international practice in all aspects of financial regulation, whether they involve international activities or domestic activities. According to the IMF itself, our regulatory regime is up to the best international standards. Additionally, the CBFSAI has indicated in its Financial Stability Report of 2007 that the stability of the Irish banking system remains robust when assessed by the usual indicators of financial health such as asset quality, profitability, solvency, liquidity and credit ratings.

Mary Upton (Dublin South Central, Labour)
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Question 117: To ask the Tánaiste and Minister for Finance if he has been advised of the exposure of the banking and financial system here to sub-prime lending; his proposals to regulate sub-prime and related lending; and if he will make a statement on the matter. [29600/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Financial Stability Report 2007 published by the Central Bank and Financial Services Authority of Ireland (CBFSAI) last week is a comprehensive and detailed assessment of the impact of international financial market conditions on the Irish financial sector and on financial conditions in the economy generally.

I welcome the CBFSAI's conclusion that the Irish financial system is well placed to withstand any adverse economic and sectoral developments in the short to medium term. The report highlights that based on key indicators such as asset quality, profitability, solvency and liquidity the Irish banking system is strong and robust and it is clear that domestic banks have no significant direct or indirect exposure to US sub-prime mortgages. The report also notes that the domestic banking sector has minimal direct investment in the Irish sub-prime residential mortgage market and that in any case the market is small in relative terms with generally modest average loan-to-value ratios.

There is also a co-ordinated EU response to international financial, market conditions. EU Finance Ministers have agreed on a set of common principles and a roadmap of further actions to enhance financial stability arrangements and the ability of authorities to respond to market developments Ireland is of course participating fully in this work to ensure there is an effective EU-wide system to maintain financial stability taking into account the important cross-border linkages that now exist in EU financial markets.

As regards regulation of what is termed sub-prime lending in the domestic market, Section 19 of the Markets in Financial Instruments and Miscellaneous Provisions Act 2007 amended Part V of the Central Bank Act 1997 to provide for an appropriate system of authorisation and regulation of retail credit firms engaged in specialist or sub-prime lending and home reversion providers not currently subject to financial regulation in respect of their lending activities. The primary purpose of this amendment was to extend to customers of these firms the benefit of the consumer protections provided for in the Financial Regulator's Consumer Protection Code.