Bernard Durkan (Kildare North, Fine Gael)
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Question 170: To ask the Tánaiste and Minister for Finance if credit restrictions or guidelines are available to prevent sub-prime or otherwise lending; and if he will make a statement on the matter. [29932/07]

Bernard Durkan (Kildare North, Fine Gael)
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Question 171: To ask the Tánaiste and Minister for Finance if he has identified unwise or sub-prime lending by financial institutions here; and if he will make a statement on the matter. [29933/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I propose to take Questions Nos. 170 and 171 together.

A comprehensive system of banking supervision is in place under both EU and domestic law to ensure that credit institutions do not put customers' deposits at risk through imprudent lending practices. Banking supervision encompasses the authorisation of banks and building societies, their prudential supervision on an ongoing basis and the development of supervisory guidance and requirements for their operation. Prudential supervision involves monitoring the business of banks and building societies and how it is planned, managed, and controlled and checking compliance with statutory and non-statutory requirements. This system of prudential regulation is administered in Ireland by the Financial Regulator, who can increase the level of surveillance of particular practices in circumstances that a concern arises. The Financial Stability Report 2007 recently published by the Central Bank and Financial Services Authority of Ireland 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. 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 and home reversion providers. 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.

Kieran O'Donnell (Limerick East, Fine Gael)
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Question 172: To ask the Tánaiste and Minister for Finance if, in view of the turmoil in the financial markets caused by the US sub-prime mortgage crisis, he is satisfied that there is adequate prudential supervision in operation by the Irish financial regulator over all the banking and financial sectors operating here; and if he will make a statement on the matter. [30006/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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It is always worth remembering that sound prudential supervision aimed at ensuring the continuing solvency and liquidity of banks provides the best protection for depositors. As the Deputy is aware, Ireland's system of financial regulation is based largely on a comprehensive and detailed EU template and conforms to international best practice standards. According to the IMF, our regulatory regime is up to the best international standards. Additionally, the Central Bank and Financial Services Authority of Ireland 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. The report states that the Irish market is characterised by limited involvement by mainstream banks in what is termed sub-prime lending, the relatively small size of the market and generally modest average loan-to-value ratios. It states that domestic banks have no significant direct or indirect exposures to US sub-prime mortgages. The Deputy may also wish to note that section 19 of the Markets in Financial Instruments and Miscellaneous Provisions Act 2007 provides for a system of authorisation and regulation of retail credit firms and home reversion providers not previously subject to regulation. This includes firms engaged in specialist or sub-prime lending. The primary purpose of this amendment was to extend to customers of these firms the benefit of the protections provided for in the Financial Regulator's Consumer Protection Code.