Written answers

Tuesday, 31 May 2016

Department of Finance

Central Bank of Ireland Supervision

Photo of Mattie McGrathMattie McGrath (Tipperary, Independent)
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278. To ask the Minister for Finance if he is aware whether any financial institution regulated by the Central Bank has been or continues to be involved in speculative oil trades to attempt to keep the price of oil artificially high; if he has sought assurances from the Governor of the Central Bank in this regard; if he has discussed this with his Government colleagues; and if he will make a statement on the matter. [13626/16]

Photo of Mattie McGrathMattie McGrath (Tipperary, Independent)
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279. To ask the Minister for Finance to outline the role the Central Bank plays in supervising oil trades by any financial institution regulated by it; the action being taken to protect consumers from the market manipulation that is taking place in the oil market; if legislation is required; and if he will make a statement on the matter. [13627/16]

Photo of Mattie McGrathMattie McGrath (Tipperary, Independent)
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281. To ask the Minister for Finance if he is aware of the global media reports which have highlighted that global financial institutions (details supplied) have publicly admitted to setting aside billions of dollars in reserves to cover losses arises from the collapse in oil prices and the impact that it is having on the associated loans advanced for energy exploration; his views on headlines warning that big banks brace for oil loans to implode; if he is concerned about this potential contagion spreading to the European banking system; if he has discussed these issues with his European colleagues; and if he will make a statement on the matter. [13629/16]

Photo of Mattie McGrathMattie McGrath (Tipperary, Independent)
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282. To ask the Minister for Finance if he will request a report from the Central Bank regarding the impact from a global meltdown on loans associated with the oil and energy sector; if he or his Department have engaged in discussions with the European Central Bank, the European Banking Authority, the European Securities and Markets Authority or the European Systemic Risk Board on this topic; his views on the exposure of European banks to such lending; if he is satisfied that the regulatory oversight is sufficiently strong to detect a repeat of the practices that were linked to the subprime mortgage crisis; his plans to introduce regulations or legislation in this area; if he will undertake to update the House on this issue; and if he will make a statement on the matter. [13630/16]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 278, 279, 281 and 282 together.

The system for monitoring and supervising significant financial institutions has changed fundamentally in the last number of years and continues to evolve. The Single Supervisory Mechanism (SSM), the new system of financial supervision comprising of the European Central Bank (ECB) and the national competent authorities of participating EU countries, including the Central Bank of Ireland, represents a sea change in advancing financial integration and stability in Europe.

Under this new system of supervision, the SSM identifies and addresses risks at an early stage and is able to take suitable countermeasures. The SSM requires banks to give due consideration to a broad range of relevant factors when designing their business models including capital, liquidity, leverage, interconnectedness and systemic significance and structure. It has led to considerably more and higher-quality capital for banks; new standards for liquidity reserves and indebtedness in banks; and considerably stricter risk management and governance requirements.

In agreeing the structure of the SSM, EU member states, including Ireland, were satisfied that the exposure of European banks to lending in any sector of the economy is monitored and addressed under this new joint supervisory framework.

Also, the Eurogroup regularly considers Europe-wide economic and financial matters and discussions have included issues such as emerging risks in the international arena, including fluctuations in the price of oil. There are also opportunities for similar discussions when I meet with my European ministerial colleagues in the Economic and Financial Affairs Council (Ecofin).

Fluctuations in the price of oil is one of the risks monitored by my Department. As such, we are cognisant of any impacts of such fluctuations on the economy. In addition, my officials regularly meet with their counterparts in the Central Bank to discuss operational matters, including risks faced by the financial sector.  Indeed, the International Monetary Fund (IMF) is currently undertaking a Financial Sector Assessment Programme (FSAP) that focuses on the risks and vulnerabilities to the sector, which included extensive discussions between my officials, Central Bank officials and the IMF. The outcome of the FSAP is expected to be published in the coming months.

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