Tommy Broughan (Dublin North East, Labour)
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Question 51: To ask the Minister for Finance when he plans to introduce legislation providing for a bank resolution mechanism or living will for insolvent banks; and if he will make a statement on the matter. [17196/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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In the course of the NAMA Bill debate, I indicated I would examine options for the introduction of a legislative regime to deal in a systematic way with distressed financial institutions. My objective is to ensure the State has in place a range of tools to address problem institutions effectively in the interests of maintaining financial stability, minimising reliance on public moneys and ensuring continuity of key banking activities. Normal corporate insolvency procedures are not adequate for failing financial institutions as they were not designed with the objective of protecting financial stability.

In view of the central role performed by central banks in resolution frameworks for financial institutions, my Department is in consultation with the Central Bank and the Financial Regulator with a view to the development of suitable options for progress in this area including draft legislative proposals, which I will consider in due course. Special resolution regimes for the financial sector are increasingly recognised as a key means of reducing the impact of the distress or failure of individual financial institutions. My deliberations in this area are assisted by the work ongoing in a number of international fora.

At EU level, the Commission has consulted on a EU framework for cross-border crisis management in the banking sector to allow the relevant authorities to manage financial crisis events at cross-border banks. The Commission is expected to bring forward legislative proposals in 2001. Included in the Commission's proposal for discussion are additional powers for supervisors to require the preparation by systemically important institutions of firm-specific contingency and resolution plans. These plans sometimes referred to as 'living wills' would detail how an institution and its business might be wound up rapidly and in an orderly fashion. Ireland is, of course, participating fully in the work at EU level to examine this and other possible elements of bank resolution tool-kits in a cross-border context.