Three major Irish banks will have to follow regulations set out by the European Central Bank in Frankfurt, Irish Minister for Finance Michael Noonan has said, speaking at the Oireachtas Committee on Finance, Public Expenditure and Reform.
He elaborated, saying that the European Central bank will have direct control of the regulations over the banks once the new supervisory system is implemented.
Noonan has not confirmed all three banks that will be participating as yet, but he has stated that AIB and the Bank of Ireland will be two of them. “We could have a number of bids on the table for the third,” he explained. Ulster bank is a likely contender, he said, but it all depends on which institutions are seen as “systematically important”.
The supervisory system will place the European Central Bank as the responsibly party for all major banks, taking over from national regulatory bodies. The change will take place during the middle of 2014.
The role of the central regulator will be to guide national regulators, but it will be the central regulator’s decision that is final. Those not included in the scheme will continue to be overseen by the Central Bank in Ireland.
The pressing issue of whether Irish banks require more funding input was also addressed by Noonan. He said: “There is no evidence whatsoever that any of the Irish banks will need extra capital next year. They are very well capitalised. I have no evidence [to the contrary] at this point in time either.”
His statement was met with some animosity, with Sinn Féin’s financial representative countering his words. Pearse Doherty asked how the banks would be financed, should Doonan be wrong and the banks would need capital after the stress tests. Noonan replied that he was “trying to construct a theory on a fake premise.”
The new budget will be brought forward to fall in line with the new ruling from Europe. It will be presented on the 15th of October, a full two months before its usual schedule. Noonan has said the finance bill will be released before mid-December.
For more information on this topic, please read my Slide Share.