Statement by the Minister for Finance on the publication of the Credit Institutions (Stabilisation) Bill 2010 The Credit Institutions (Stabilisation) Bill, 2010 was published by the Minister for Finance, Mr Brian Lenihan T.D., today. The Bill will be debated in the Dail on Wednesday and it is expected to be enacted by the Oireachtas by the end of this week. The Bill provides the legislative basis for the reorganisation and restructuring of the banking system agreed in the joint EU - IMF Programme for Ireland. The Minister stated "A comprehensive restructuring of the retail banking system in the State is a key pillar of the EU-IMF Programme agreement. This Bill will allow the Minister to take the actions required to bring about a domestic retail banking system that is proportionate to and focused on the Irish economy. The banking system must play its role in providing the credit to the real economy to support our recovery. The joint EU - IMF Programme for Ireland has provided, on a contingency basis, the resources and support required to restore the banking system to health." The Bill provides broad powers to the Minister for Finance (in consultation with the Governor of the Central Bank of Ireland) to act on financial stability grounds to effect the restructuring actions and recapitalisation measures envisaged in the Programme. The Programme builds upon and intensifies the banking measures introduced by the Government to date. The Bill applies to banks who have received financial support from the State, building societies and credit unions. Given the exceptional nature of the powers contained in the Bill, the powers are time-limited and scheduled to expire on 31 December 2012. The powers provided in the Bill allow the Minister to implement key aspects of the agreed Programme for bank restructuring as follows:-. * to issue directions to take or prevent any actions in order to support the Government's banking strategy; * to transfer relevant institutions' assets and liabilities to facilitate the restructuring of the banking sector; * the making of subordinated liabilities orders, on a case by case basis and under particular conditions, to achieve appropriate burden sharing by subordinated creditors in relevant institutions which have received State support. The Bill provides the legislative framework for the key steps required to ensure that the size and capacity of the banking system is fully aligned to the financial needs of the wider economy. It is the first important step in putting in place an extensive Special Resolution Regime (SRR) that will provide for a comprehensive framework to facilitate the orderly management and resolution of distressed credit institutions. In that context, the Bill includes the powers to appoint a special manager to a relevant institution which would only arise in limited and exceptional circumstances in order to achieve the objectives of the legislation. In the first instance, the provisions in the Bill once it is enacted by the Oireachtas will be available to the Minister to effect, in part, the injection of capital into Allied Irish Banks prior to year end as necessary to ensure the bank is compliant with the regulatory capital requirements as set by the Central Bank of Ireland. It will also facilitate the planned restructuring of Anglo Irish Bank and Irish Nationwide Building Society as set out in the Programme agreement and consistent with EU State aid requirements. The Bill also contains provisions providing the legislative basis that underpins the Minister's decision that financial support required for AIB will be conditional on the non-payment of bonuses regardless of when they were awarded. Draft legislation providing for the introduction of a comprehensive SRR, consistent with best international practice, is scheduled for introduction to the Oireachtas by end-February 2011. 14th December 2010 Ends The Bill can be accessed at http://www.oireachtas.ie/viewdoc.asp?fn=/documents/bills28/bills/2010/58 10/document1.htm
IRISH FINANCE MINISTER'S STATEMENT ON NEW BANK BILL
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