Written answers

Tuesday, 3 November 2009

8:00 pm

Photo of Joe McHughJoe McHugh (Donegal North East, Fine Gael)
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Question 105: To ask the Minister for Finance if he has reviewed the law governing the operation of banks of systemic importance to the economy and the changes he has identified as necessary. [39150/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Minister, Department of Finance; Dublin West, Fianna Fail)
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The Deputy will be aware that the supervisory oversight of credit institutions is based on a pan-EU legislative framework, most notably the Capital Requirements Directive. In the light of events which have arisen in the context of the international financial markets crisis, the issue of the oversight of systemically important institutions is being considered, not only in the European framework, but also at a wider international level. At G20 level, in their Pittsburgh statement of September last, G20 Leaders recommended action by end 2010 to address the issue of systemically important financial institutions to reduce the probability of their distress and impact of their distress or failure. A report will be presented to G20 finance ministers in November on methodologies for determining whether a financial institution is of systemic importance. While discussions are at a relatively early stage, the IMF, the Financial Stability Board and the Basel Committee on Banking Supervision are also currently working on the issue. In parallel, the EU Commission is undertaking complementary work on systemically important financial institutions in the context of the current EU legislative framework. Ireland is participating fully in this work at EU level.

In my speech on the Second Stage of the NAMA Bill I indicated that I was examining options for the introduction of a legislative regime to deal with distressed financial institutions. The objective will be to ensure that the State has in place a range of tools to protect deposit holders and ensure financial stability and maintain international market confidence. I hope to be in a position to bring forward proposals in this area in the New Year. The development of this legislation will be informed by the work underway at the international level.

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