President Mary McAleese has signed the Credit Institutions (Stabilisation) Bill into law following a three-hour meeting of the Council of State.
The Council of State met this afternoon to consider the controversial new legislation, which gives wide powers to the Minister for Finance to reform and restructure the banking sector.
President McAleese had sought the advice of the council before she decides to sign the new Bill into law.
The Dáil and Seanad last week approved the Bill.
Opposition parties raised concerns about the powers being given to the Minister. The European Central Bank also has concerns - saying the Bill was 'insufficiently legally certain' on some key issues relating to the euro system.
The Council of State has 22 members and is made up of the Taoiseach, Tánaiste, two senior judges, the Ceann Comhairle of the Dáil, the Cathaoirleach of the Seanad, and the Attorney General.
The former President Mary Robinson, five former Taoisigh and two former Chief Justices are members, as are seven people appointed by the President.
This was the seventh time that Mrs McAleese has convened the Council of State.
EU backing as Bill decision awaited
The European Commission has temporarily cleared emergency measures taken by the Government to support AIB, Anglo Irish Bank and Irish Nationwide Building Society.
The Commission said it had approved an injection of €4.95 billion into Anglo Irish Bank, as well as a guarantee covering certain off-balance sheet transactions, and €2.7 billion for Irish Nationwide.
It also backed recapitalisation measures for AIB following the agreement between Ireland, the EU and IMF, which means AIB must raise around €10 billion in capital by the end of February.
But the Commission said the three institutions would still need to come up with restructuring plans, with Anglo and Irish Nationwide due to submit their plans in early 2011.
AIB will also have to also have to submit a new restructuring plan. The Commission said that for final approval, it would have to be satisfied that the bank would be viable in the long-term without further injections of taxpayers' money, and that its subordinated debt holders would share in the restructuring costs.
Competition Commissioner Joaquin Almunia said that although he welcomed the EU/IMF deal, the Commission would continue to apply EU rules on State aid to any measures provided to the Irish banks.
AIB has end-February capital target
The Central Bank has repeated that AIB has until the end of February to meet the financial targets it has set for the bank.
It was responding to a question about AIB's capital position after the transfer of the latest batch of its loans to the National Asset Management Agency at a discount of almost 60%.
AIB has now transferred more than €18 billion in loans and associated collateral to the NAMA, the bulk of them at a discount of around 60%, forcing it to seek fresh capital to shore up its balance sheet.
The Government is expected to effectively nationalise AIB soon as part of an €85 billion EU/IMF bail-out package that requires a sweeping overhaul of the banking sector.
Central Bank statement:
'AIB, Bank of Ireland, EBS are required to meet their additional PCAR capital requirements by end-February 2011 and Irish Life & Permanent by end-May 2011. The date for raising the capital required was amended to end-February as the Central Bank concluded that as a result of updating the capital requirements on the on the back of the EU/IMF Financial Measures agreement, the additional capital requirements had substantially superseded the original additional capital requirement imposed.
Notwithstanding the above additional capital requirements to be met by end-February and end-May 2011, all credit institutions are required to maintain minimum own funds in accordance with the Capital Requirements Directive on an ongoing basis.'
