Peter Mathews (Dublin South, Fine Gael)
Link to this: Individually | In context

Question 39: To ask the Minister for Finance if he will confirm that section 61 of the Credit Institutions (Stabilisation) Act 2010 provides him with the ability to move any asset or liability of the banks to a new company and that this ability will remain with himself until 1 January 2013 when the Central Bank and Credit Institutes (Resolution) Bill 2011 is passed and then this ability will be transferred to the Governor of the Central Bank from 1 January 2013; and if he will make a statement on the matter. [29180/11]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

Part 5 of the Credit Institution (Stabilisation) Act 2010 ("CIS Act") provides the Minister with the power to transfer assets and/or liabilities of a "relevant institution" - i.e. an institution within the scope of the CIS Act - to another institution, subject to the approval of the Court. Part 5 of the Central Bank and Credit Institutions (Resolution) (No. 2) Bill ("the Bill") provides the Central Bank with similar powers to transfer the assets and/or liabilities of an "authorised credit institution" - i.e. an institution within the scope of the Bill - to another institution subject to the approval of the Court. To address any overlaps between the scope of the CIS Act and the Bill following its enactment, section 3 of the Bill provides that where an institution is a relevant institution within the scope of the CIS Act, it does not fall within the scope of the Bill.

The CIS Act ceases to have effect on 31 December 2012, or a later date substituted by a resolution of both Houses of the Oireachtas, and from that point on all relevant institutions will be considered authorised credit institutions and will fall within the scope of the Bill. In addition under section 55 of the CIS Act the Minister can, after consulting with the Governor of the Central Bank, make an order to declare that a relevant institution shall be taken not to be a relevant institution for the period specified in the order. In this event, section 3 of the Bill provides that the institution will fall under the scope of the Bill and not the CISA for that specified period.

Section 61 of the CIS Act does not confer on the Minister for Finance a power as described in the Deputy's question. Section 61 of the CIS Act 2010 deals with instruments to which relevant institutions or their subsidiaries or holding companies are a party. Commercial instruments frequently provide for their termination or other consequences where the ownership in or control of one of the contracting parties changes, where particular orders are made against the parties or where certain events happen. The section specifies that certain consequences for such instruments, such as termination, or triggering of payments due, shall not have effect as a result of the Act or the announcement by the Minister of the intention to enact this legislation, or any statement made by the Minister or the Governor of the Central Bank in relation to this Act or the use of any powers in the Act. Neither shall these consequences arise as a result of the making of an order or requirement for the making of an order or any act taken or omitted by any person in compliance with the order. A similar provision is made in the Bill in section 99 of the Bill as amended in the Select Sub-Committee on Finance.