Central Bank to get new powers over banks

Monday 28 February 2011 19.51
Central Bank - Sweeping new powers over banks
Central Bank - Sweeping new powers over banks

Sweeping new powers are to be given to the Central Bank to take over, run and break up banks.

New legislation published today will ultimately supersede the controversial Credit Institutions Stabilisation Act by the end of next year, which gave additional authority to the Minister for Finance.

As part of the EU/IMF deal, Ireland was required to introduce new laws to take control of failing banks in times of future crisis.

Crucially this legislation aims to clean up broken banks without creating an expensive mess for the taxpayer.

The powers allow the Central Bank appoint a special manager run a bank which is in trouble.

That manager can remove any staff, directors or consultants.

A special resolution fund will be set up to cover the cost of assuming control of an institution. The money for the fund will come from a levy on banks.

The new legislation will cover foreign banks including those in the IFSC.

It also allows the authorities establish a bridge bank to hold assets temporarily.

The legislation says the media will not be able to report on the Central Bank's intention to take control of a bank.

The High Court will also be able to impose restrictions on the publication of commercially sensitive information.