The financial regulator remains on "high alert" as the financial crisis that's engulfed Lehman Brothers and American Investment Group Inc. shows little sign of ending.
"The events of recent days demonstrate that it is still unfolding and looks likely to go on for some time yet," Patrick Neary, chief executive officer of the Irish Financial Services Regulatory Authority, said in a speech in Dublin today.
"We continue to remain on high alert and to be vigilant to any emerging risks, especially as regards the availability and cost of funding in the international money markets."
Irish bank shares have fallen around 60 per cent this year amid the seizure in credit markets that's led to losses in the financial industry of more than $500 billion. The crisis this week drove Lehman out of business and forced the US government to take control of AIG in an $85 billion bailout.
Bank of Ireland Plc, the country's second-biggest bank, today said it will cut its dividend by 50 per cent and post a drop in first-half profit. The lender said the cut was the "right action" to "protect the bank's capital position."
Mr Neary said that Ireland's banks have only "very limited" exposure to the U.S. subprime market, echoing comments made by Finance Minister Brian Lenihan.
"Irish banks were in a position to benefit from a solid base when the turmoil hit," the regulator said, referring to the regulator's liquidity requirements.
They are "resilient and have good shock absorption capacity to cope with the current situation."
Bloomberg