Wednesday, 18 February 2009
Department of Finance
Banking Sector Regulation
Question 72: To ask the Minister for Finance if he will establish a banking commission or similar authority on a time limited basis to oversee the reform, restructuring and recapitalisation of the Irish banking system in order to restore the credibility of the Irish banking system on international financial markets; and if he will make a statement on the matter. [6362/09]
A well functioning financial system is a key ingredient of our economy and the Government has provided decisive action in this regard. The Government is committed to providing a platform for a well regulated, profitable banking industry of high repute in Ireland that operates in a national and international financial services environment. Our vision for the banking sector is that the banks will serve borrowers, small and medium sized enterprises and all stakeholders in an honest way and ensure that customers and consumers in particular are treated in a reputable and respectable way.
The Minister for Finance is advised on banking issues by the Governor of the Central Bank, the Financial Regulator, independent financial advisors, the National Treasury Management Agency and by senior officials in his Department. Taking account of the advice received the Government has proceeded with a comprehensive recapitalisation of Ireland's two main banks and with the nationalisation of Anglo Irish Bank. The Government is also in discussions with the other covered institutions, Irish Life & Permanent, Educational Building Society and Irish National Building Society concerning their respective positions.
The Bank Guarantee Scheme introduced last September and the bank customer package which has accompanied recapitalisation will further reinforce the stability of our financial system and increase confidence in our banks' ability to contribute to the economy.
It is also evident that our financial regulatory regime needs to adjust to the new realities. Work has begun on reforming the system. I have asked the Boards of the Central Bank and the Financial Regulatory Authority for their views on the approach to financial regulation in Ireland.
At EU level, new regulatory proposals currently being discussed are due for adoption early in 2009. The role and mandates of national regulators have also been the subject of in-depth consideration. Further proposals in this area will be introduced during 2009 following the report of the de Larosière Group, on prudential soundness, the orderly functioning of markets and stronger European co-operation on financial stability oversight, early warning mechanisms and crisis management.
The Government considers that the measures to recapitalise and restructure Irish banks and to reform the regulation of the banking industry as outlined above will put the Irish banking system back on a stable footing and provide it with an opportunity to supply the credit necessary to support economic development.