Catherine Murphy (Kildare North, Independent)
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64. To ask the Minister for Finance if he will provide details of the proposed bank resolution scheme which is being considered by ECOFIN under his chairmanship; if he will confirm the order in which it is proposed that bank creditors absorb losses under the proposed arrangement; if he is proposing a lower limit to the amount of deposits which can be affected in such a scenario; and if he will make a statement on the matter. [23660/13]

Séamus Kirk (Louth, Fianna Fail)
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75. To ask the Minister for Finance if he will ensure deposits are protected in any revised Eurozone bank resolution mechanism; and if he will make a statement on the matter. [23924/13]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 64 and 75 together.

The Bank Recovery and Resolution (“BRRD”) proposal aims to introduce an effective recovery and resolution framework for credit institutions and investment firms at national level to ensure minimum harmonisation at EU level. The proposed directive provides for three stages of crisis prevention and management: a preventative stage, an early intervention stage and a resolution stage. Part of the resolution stage provides for a bail-in tool which is a mechanism for allocating losses to shareholders and creditors of the institution under resolution in accordance with an established bail-in hierarchy.

The BRRD proposal, as published by the Commission, provides that under bail-in losses would in the first instance be allocated to shareholders. Once shareholders claims have been exhausted subordinated creditors would then be written down. Only when these claims have been exhausted could senior creditors be written down.

The hierarchy of claims for bail-in in the BRRD proposal that was published by the Commission last year does not differentiate between different classes of senior creditors such as depositors with deposits over €100,000 (uninsured depositors) and senior bondholders. This matter is the subject of on-going debate in the Council negotiations on the BRRD file.

At ECOFIN earlier this month I asked finance ministers to consider the scope and design of the bail-in tool in the BRRD directive. Among other things, these discussions focused on how bail-in would apply to uninsured depositors (i.e. deposits greater than €100,000). I proposed that these depositors should be given a higher ranking in the hierarchy of claims than other senior debt. In effect they would only ever bear losses after other senior creditors such as bondholders.

I am glad to report that the discussion provided the Presidency with sufficient clarity on the position of Member States to enable us to press ahead with our efforts to achieve agreement on this file. On the question of how deposits are affected I noted convergence on a number of points:

- agreement among Member States that deposits under €100,000 must be fully guaranteed;

- considerable support for depositor preference for uninsured deposits i.e. they would be the last category to be bailed-in.

The Deputies will be aware that the Government fully adheres to the EU policy of guaranteeing deposits of €100,000 per customer, per bank.

The objective of the Irish Presidency in placing this item on the May ECOFIN agenda was to try to achieve a common understanding on this issue which would help to unlock discussion on other areas of the BRRD notably the financing element.

I am proposing to bring the BRRD dossier back to the ECOFIN on 21st June with a view to reaching a Council agreement on the overall BRRD proposal.