Sweeping new powers are to be given to the Central Bank to take over, run and break up banks under new legislation published today.
The law will ultimately supersede the controversial Credit Institutions Stabilisation Act - which gave additional authority to the Minister for Finance - by the end of next year.
As part of the EU-IMF bail-out, 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 to appoint a special manager to 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 to 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.
A Fine Gael spokesman said: "Fine Gael was the first Party to call for bank resolution legislation. We will now have to review the details of this Bill in government to make sure it is consistent with our banking policy."
