Bernard Durkan (Kildare North, Fine Gael)
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Question 134: To ask the Minister for Finance if it is intended to apply specific or particular regulatory conditions on the banking system in the future in view of recent experience; and if he will make a statement on the matter. [45556/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The legislative regime for financial regulation In Ireland is largely based on a comprehensive EU framework of Directives which applies across the EU. Arising from the recent financial turmoil, the Ecofin Council meetings in October and December 2007 agreed a set of common principles and a roadmap of further actions to enhance financial stability arrangements and the ability of authorities to respond to serious disturbances in EU financial markets. These Ecofin Roadmaps deal specifically with strengthening EU arrangements for financial stability and actions taken in response to the financial turmoil. New regulatory requirements include:

improvements to the Capital Requirements Directive to further strengthen the existing prudential framework for risk management and to put in place enhanced coordination among supervisors in relation to cross-border groups

improved valuation of illiquid assets in accounting standards for financial institutions

amendments to the Deposit Guarantee Scheme Directive to improve coverage levels and payout periods; and

proposals to improve the oversight of independent credit rating agencies.

The role and mandates of national regulators have been the subject of in-depth consideration by the Ecofin Council arising from the Ecofin Roadmaps. Common reporting for financial institutions are being introduced to enable greater EU-wide consistency in supervision and colleges of supervisors are being introduced for cross-border financial groups to allow for easier exchange of information between authorities.

These measures are in addition to the broad range of conditions imposed on participants in the State's guarantee scheme for credit institutions. The Regulatory Authority, which has statutory responsibility for the regulation of credit institutions, has advised me that it will continue to intensify its on-site and off-site supervision of credit institutions. This will build on revised capital and liquidity measures introduced by the Regulatory Authority during 2006 and 2007. The Regulatory Authority will focus on liquidity requirements, capital adequacy, risk management, balance sheet structure and corporate governance. This may involve setting additional regulatory ratios as appropriate in order to reduce the risk in the balance sheet, reflecting the current domestic and global conditions.