Michael Moynihan (Cork North West, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

To ask the Minister for Finance his plans to review the operation of the deposit guarantee scheme following the recent payments under the scheme to compensate deposit holders in the Irish Bank Resolution Corporation; and if he will make a statement on the matter. [14049/13]

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

The Central Bank press release of 7 March 2013 confirmed that as of that date the Deposit Guarantee Scheme (DGS) made compensation payments totalling €9.03 million to 394 depositors of IBRC Limited, which was placed in liquidation on 7 February 2013. Eligible deposits in IBRC are covered by joint safeguards. Eligible deposits of up to €100,000 for an individual and €200,000 for individuals with a joint account in IBRC are protected by the DGS. Eligible deposits above this limit are guaranteed under the Eligible Liabilities Guarantee (ELG). There is no need for depositors to make a claim for compensation under the DGS. The Special Liquidators have provided details of eligible depositors and account balances to the Central Bank. Payments are then made by cheque within 20 working days of the appointment of the Special Liquidators and are sent to depositors at the address held by IBRC. In a limited number of circumstances, additional information may be required to confirm eligibility. In this instance, a formal claim is required. Depositors will be contacted but may also download relevant forms from the Central Bank website www.centralbank.ie. The Central Bank are keeping customers of IBRC informed by providing regular updates on its website.

The compensation payments have been made from the Deposit Protection Account (DPA), operated by the Central Bank of Ireland and funded by credit institutions covered by the scheme. Each deposit-holding institution is required to maintain a balance on their DPA account of 0.2% of their total deposits (with a minimum amount of €50,000 in the case of all institutions except credit unions). The balance in the DPA was €388 million prior to this compensation event.

There are no specific plans at national level to alter the operation of the DGS. However, the Deposit Guarantee Scheme (DGS) in Ireland was established under Irish and European legislation to protect depositors; it therefore will be impacted by European legislation on the operation of Deposit Guarantee Schemes across Europe, which is currently the subject of negotiations.

On 12 July 2010, the Commission adopted a legislative proposal for a thorough revision of the Directive on Deposit Guarantee Schemes. The main aim of the 2010 proposal is to significantly enhance depositors’ confidence by introducing a higher level of coverage, faster payout and more credible funding of the various Deposit Guarantee Schemes. This proposal will now travel as part of the Banking Union Proposals. It addresses issues including simplification and harmonisation of the provisions of the current Directive. In particular, it looks at the scope of the coverage and arrangements for payout; optional mutual borrowing among Deposit Guarantee Schemes in certain circumstances, the introduction of an information template and better access to information for depositors.

The European Parliament voted in Plenary on the Deposit Guarantee Schemes proposal on 16 February 2012. This vote took place in the absence of an agreement with the Council on a number of key issues. The file is now effectively at a second reading.

The last Council Working Party (attachés) took place on 23 July 2012 in an attempt to restart the negotiation of the proposals. However, Member States were unwilling to reopen the debate fully until the Banking Resolution package is near completion as it is heavily linked to this proposal, especially with respect to the funding of the schemes. It appears that the funding issues will now be discussed in the context of Bank Recovery and Resolution Proposals and therefore as Presidency Ireland will recommence discussions of the DGS proposal in the coming weeks with a view to agreeing with the European Parliament improvements to the operation of DGS schemes across Europe in the near future.