The Minister for Finance has outlined the resolution framework designed to deal with “all types of bank problems, including insolvency”, due to be discussed at next week’s ECOFIN meeting.
Appearing before the Oireachtas Finance Committee, Michael Noonan explained that the directive sets out the order of creditor preference.
He said this was an improvement on the current position for depositors in this country, where they currently rank on a par with senior bond holders.
Mr Noonan gave the example of “an Anglo Irish Bank situation” and said first at risk are shareholders.
Next to be burned, in accordance with the requirement of the bank to pay creditors or return to solvency, would be junior debt. Finally would be senior debt of which, he said, there would be different categories.
Mr Noonan said he did not know if the resolution framework will be agreed however the proposal as presidency would “improve the position of depositors in the banking system beyond where it is now”.