Sweeping new bank Bill published
Legislation creating a resolution regime for banks and giving the governor of the Central Bank the power to intervene in their affairs has been published today.
The Central Bank and Credit Institutions (Resolution) Bill, 2011 is designed to create a wider range of options for dealing with distressed banks that are not in receipt of State support.
The powers contained in the Bill can only be used when it is deemed that an immediate liquidation of the institution in question would not be in the public interest.
Under the legislation, the Central Bank governor can wind-down or break-up a distressed credit institution by appointing a special manager, transferring assets and liabilities or by establishing a bridge bank.
The Bill also provides for the creation of a fund that can be accessed by a distressed institution. The institutions and minister can contribute to the fund.
A commitment to publishing such a piece of legislation before the end of February was included in the agreement signed in December between the Government and the EU and IMF.
The legislation will not immediately apply to domestic institutions but covers all other banks authorised in the State, foreign owned subsidiaries and banks operating in the IFSC.
Allied Irish Banks, Bank of Ireland, Anglo Irish Bank, Irish Nationwide, EBS and Irish Life and Permanent are covered by the Credit Institutions (Stabilisation) Act which was introduced late last year.
The objective of the new legislation is to shift the Irish institutions falling under the Credit Institutions (Stabilisation) Act to being covered by the Central Bank and Credit Institutions (Resolution) Bill before the end of 2012.