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Dáil Éireann debate -
Wednesday, 12 Oct 2011

Vol. 743 No. 2

Central Bank and Credit Institutions (Resolution) (No. 2) Bill 2011: Report and Final Stages

I move amendment No. 1:

In page 18, line 28, to delete "and" and substitute the following:

"(c) shall consult with the Credit Union Advisory Committee (within the meaning of section 180 of the Credit Union Act 1997) where the proposed regulations relate to credit unions, and”.

On Committee Stage I undertook to consider the provision of a consultative role for the Credit Union Advisory Committee, CUAC, in the making of regulations regarding the resolution fund. Following consultation by my officials with the chair of the CUAC I am now proposing an amendment to that effect.

The CUAC is a statutory body charged with advising me as Minister on credit union issues. It is therefore appropriate that it should be consulted in regard to regulations which will affect the credit union sector. I also undertook to consider a similar role for the CUAC on the intervention conditions. However, following consultation with the chair of the CUAC I do not propose to make such an amendment. It is important that the Central Bank is able to act independently in taking resolution actions subject to the carefully drafted intervention conditions in the Act. The requirement to consult in this way could delay necessary Central Bank action.

On Committee Stage, Deputy Michael McGrath, Deputy Pearse Doherty and others argued this strongly. It is a good proposal and therefore I have come back with this Report Stage amendment to meet their requirements.

I welcome the Minister's response to Deputy McGrath's suggestions on Committee Stage. Consultation with the credit union movement is essential, particularly with the issues that are arising. I thank the Minister for that.

Amendment agreed to.

Amendment No. 2 in the name of the Minister may be taken with amendment No. 18 as they are related.

I move amendment No. 2:

In page 23, after line 46, to insert the following:

27.—(1) Unless the Bank provides prior written consent, a transferor shall not dispose of any asset or liability which is to be transferred under a transfer order, except in the ordinary course of its business, during the period beginning with the delivery of the written notice under section 26(1) or the date on which the transferor otherwise becomes aware of the proposed transfer order for the purposes of consultation under section 26(4), whichever is the earlier, and ending on the date of effect of the transfer order under section 48.

(2) The officers and employees of a transferor shall comply with subsection (1).

(3) If the Bank is of the opinion that a transferor is in breach of subsection (1) or has taken steps that would likely lead to such a breach, the Bank may apply ex parte to the Court for an order compelling compliance with that subsection.”.

The purpose of amendment No. 2 is to prevent the dissipation of assets and liabilities by a transfer where those assets and liabilities are to be transferred under a transfer order. If the Central Bank is of the opinion that a transfer order is in breach of this provision or has taken steps that would likely lead to such a breach, it can apply ex parte to the High Court for an order compelling compliance.

Amendment No. 18 makes a similar amendment to the Credit Institutions (Stabilisation Act) 2010. The inclusion of these provisions will help to ensure that a transfer can take place as smoothly and successfully as possible. It is to ensure that what is intended in the section can be done and would have the force of the court behind it if there was failure to comply.

Amendment agreed to.

Recommittal is necessary in respect of amendment No. 3 as it does not arise out of committee proceedings. Amendments Nos. 4, 14, 15, 17 and 19 are related and may be discussed with amendment No. 3.

Bill recommitted in respect of amendment No. 3.

I move amendment No. 3:

In page 28, to delete lines 25 to 27 and substitute the following:

"(b) the value of the shares acquired by or disposed of by the member—

(i) as at the date or dates on which the shares were acquired or disposed of, as the case may be, and

(ii) as at the date on which the transfer order concerned was made.".

The purpose of this amendment is to provide that in an application to set aside a transfer order, where the applicant is a member of the institution the court will be permitted to take into consideration the value of any shares acquired or disposed of at the date on which the order was made. This information will be considered in addition to when an applicant became a member, when he or she increased or decreased his or her shareholding in the institution concerned, and the value of any shares acquired or disposed on the dates of acquisition or disposal. It is based on the principle that the court should be permitted to take into account the behaviour of an applicant when considering a challenge.

The same amendment is proposed for section 60 which addresses set-aside of special management orders — amendment No. 4 — and for those sections of the Credit institutions (Stabilisation) Act 2010 that address set-aside or direction orders — amendment No. 14; special management orders — amendment No. 15; subordinated liabilities orders — amendment No. 17; and transfer orders — amendment No. 19.

Amendment No. 19 also deletes section 37(5) of the 2010 Act which relates specifically to credit unions. This reflects the fact that upon enactment of this Bill the credit unions will no longer fall within the scope of the 2010 Act, therefore, the section in question becomes redundant. It is to ensure that when the court is making a decision it will have all relevant information. This section had specified what we consider to be relevant in terms of acquisition of shares and shares transactions. This moves it along a another little bit on further examination so that the court has the fullest possible information on these issues before it makes anorder.

Amendment agreed to.
Bill reported with amendment.

I move amendment No. 4:

In page 51, to delete lines 10 to 12 and substitute the following:

"(b) the value of the shares acquired by or disposed of by the member—

(i) as at the date or dates on which the shares were acquired or disposed of, as the case may be, and

(ii) as at the date on which the special management order concerned was made.".

Amendment agreed to.

Amendment No. 5 is in the name of the Minister. Amendment No. 11 is related and may be discussed with amendment No. 5.

I move amendment No. 5:

In page 64, line 31, to delete "by the Central Bank".

These amendments are required to address a technical issue with the wording of section 88 and of item 3 of Schedule 2, Part 4, which amends section 74 of the Land and Conveyancing Law Reform Act 2009, as published. Any disposal pursuant to an order will not in practice be made by the Central Bank although the Central Bank will be proposing the order. It is therefore necessary to remove the words "by the Central Bank". It looked as if the Central Bank would be acting in such circumstances. Where the action is taken under the instruction of the Central Bank it is not the agent who will be acting and in view of this we wish to delete "by the Central Bank". It is a purely technical amendment.

Amendment agreed to.

Amendment No. 6 may be discussed with amendments Nos. 7 to 9, inclusive. Members should note that if amendment No. 6 is agreed, amendments Nos. 7 to 9, inclusive, cannot be moved.

I move amendment No. 6:

In page 80, to delete lines 5 to 32 and substitute the following:

"

1

Section 87(3)

After paragraph (d), insert:“(e) require the credit union to raise within such period as may be specified and maintain such reserves or other financial resources or to maintain such non-financial resources, as may be specified;(f) require the credit union to take such steps as may be specified to strengthen its systems or controls;(g) require the credit union to apply a specified policy for making provision for such debts or treatment of assets, as may be specified, for the purposes of capital and reserve requirements;(h) require the credit union to restrict or limit its business, operations or activities, as the Bank considers necessary, to reduce risks inherent in its activities, products and systems;(i) require the credit union to provide a statement in writing to the Bank of the steps it will take to comply with any regulatory direction imposed under this section or with any other requirement imposed on a credit union under this Act;(j) impose limitations on the acceptance of members’ savings or the employment of assets;”.

".

Section 87 of the Credit Union Act 1997 was amended on Committee Stage to enhance the existing powers of the Central Bank to issue regulatory direction to credit unions. A number of concerns were raised by Deputies and credit union representatives that the powers concerned were too broad and open to interpretation. In response to those concerns I asked my Department to brief and consult with the Commission on Credit Unions, the Credit Unions Advisory Committee, the Irish League of Credit Unions and the Credit Union Development Association.

The text of the amendment was revisited on foot of those consultations to address the genuine concerns raised. I believe the text of the amendment proposed meets the financial stability needs of the Central Bank while providing for a balanced and proportionate approach from a credit union point of view. Feedback from the credit union representatives on this text has been very positive.

The Credit Union Act 1997 does not currently provide an appeal mechanism for the credit union regulatory directions. I intend to ask the Commission on Credit Unions to examine this issue and make appropriate recommendations for consideration in the Credit Union Bill to be published later this year.

This was a matter of lengthy debate on Committee Stage. An amendment was moved by me in effect to give the same powers of resolution in respect of credit unions as the bank would get under the Act in terms of other financial institutions. It was somewhat of a blunt instrument and after the debate, on consideration, we decided to refine it further in consultation with the stakeholders. We have agreement now from the credit union movement that what is now being put in on Report Stage is appropriate and acceptable to it.

There were also suggestions from various Deputies that we will put an appeal mechanism in place but it was not possible for me to get an appeal mechanism drafted, even if it was appropriate to do so, in time for Report Stage. The Commission on Credit Unions continues to sit and will present its final report in April. We are referring the issue of an appeal to the commission.

Yes, it is an appeal against the action taken by the Central Bank to intervene in a credit union. There is no appeal mechanism now. The pros and cons are as follows: If one has an appeal mechanism, we delay the bank from going in, which it may have to do as a matter of urgency. On the other hand, it may be appropriate in certain circumstances to have somebody else take a second look. That is the weight of the argument. Since the Commission on Credit Unions is considering issues such as this, we are referring this matter to it and we will consider its recommendation in due course.

Amendment No. 6 is being discussed with Amendments Nos. 7 to 9. Amendments Nos. 7 to 9, inclusive, are related and alternative to amendment No. 6.

I welcome the opportunity to discuss this Bill.

I am sure the Minister is well aware of my overall concerns and that Sinn Féin Party members will not be supporting the legislation, as our concern is with the State injecting its own money into this fund. As nobody knows what the future holds, this could be another blank cheque for the restructuring of the banking sector. We have tried to deal with this fundamental principle at earlier stages. While my party will not be voting for this Bill that does not stop us from engaging constructively with it. I note that we are the only party that has submitted Committee and Report Stage amendments.

The Minister has always engaged with us in dealing with the Billl. While we have not always been happy with the outcome, we acknowledge the thorough engagement. I appreciate that the concerns I raised in my amendments on Committee Stage have been taken on board and that after genuine consultation with the credit union sector, the Minister tabled amendments on Report Stage, which is a very satisfactory outcome. For that reason, I will withdraw my amendments.

I think the Minister's statement in the Seanad on the recapitalisation of the credit union at a cost of between €500 million and €1 billion has caused alarm. As the figures were not put in context, there was no justification for it. This has unsettled credit union members and created negative consumer confidence. It appears the Minister made his assessment on the information given by the Central Bank, which is based on the unpublished and by all account poorly conducted research on the credit union movement. It appears from media reports that selected journalists are being briefed on that research, which I think paints a confusing picture for many people. I understand that only a very small number of credit unions will need financial assistance and will need to be dealt with immediately. The broader issue of restructuring and regulating credit unions must be left to the Commission on Credit Unions and the Oireachtas, without unnecessary interference from the regulator. The financial position of a very limited number of small credit unions must not be used by the regulator to impose an agenda on the credit union movement that is not in keeping with its community bond and not for profit ethos.

I express my dissatisfaction with the way in which the regulator is imposing lending restrictions on credit unions without any clear criteria or rationale in a manner that is completely and utterly inconsistent and in the majority of cases, clearly out of synch with the robust financial position of the credit unions concerned. We know this is driving people who relied on credit union loans for small events to go to moneylenders who are charging an annual percentage rate of more than 180%.

The Minister's performance has been in two halves. First we had his very positive engagement on credit unions, but his out of the blue comments in the Seanad, based on biased information that is out of date, caused panic in the credit union sector. Since he made those comments I have heard Government spokespersons refer to the tiny number of credit unions that need support and restructuring. The Minister has an opportunity to calm the nerves; we have had a crisis of confidence in the banking sector and we do not need the same in the credit union sector. We know that a tiny number of cases in the credit union sector need assistance, but the figure of up to €1 billion being required to deal with it, is disputed. It seems it will not be in that region.

I welcome the Minister's response and his engagement with the stakeholders. He admitted that the position on Committee Stage was somewhat of a blunt instrument, but having heard the debate in the House and the concerns expressed externally, he has been prepared to refine it and refer the issue of appeal to the Commission on Credit Unions. This provides an opportunity for further reflection on the issue and to get the balance correct. We must be realistic and accept that the unprecedented crisis has impacted on credit unions. The credit union movement is vital for people on the ground. Credit unions provide vital credit to working families in different contexts. Anything that strengthens the credit union movement, and gives certainty and security to credit union members, the public in general and to depositors is to be welcomed. I do not think we can pretend that everybody has escaped the impact of the crisis. They have not, and as a result we must be realistic in our approach and get the balance right between the regulatory impact and the sustainable operation of credit unions across the country.

I applaud the Minister for seeing sense in his consultation with the credit union movement. His decision to refer this particular aspect to the Commission on Credit Unions is wise. It is important to note that in our democratic model we have Opposition and Government sides, but the backbenchers on the Government side have a democratic role to play in Government. I reiterate my thanks to the Minister for taking our concerns on board. This was a wise decision. The credit union movement is in a healthy state, with over €1.7 billion in reserves, €12 billion in assets, personal loans of €5.6 billion and personal savings of €11 billion, which means that the total membership of 2.7 million people have average savings of €4,000. That is indicative of a very healthy credit union movement. The credit union movement is very important in peripheral areas of our constituency, where it provides not only an economic framework but also a socio-economic model which is beneficial to communities. I know that in certain sectors, for example, students are finding it more difficult to get loans, but the credit union is a very important resource.

The debate on this Bill is an example of democracy working. The Irish League of Credit Unions put forward a very good case and it is very much aware that the Commission on Credit Unions is a good model for it to work through. They are open to new regulatory frameworks. It is very important and I know the Minister will be working very closely and liaising with them. The voices of those of us on the backbenches were heard and I thank him.

I thank all Deputies who contributed, in particular Deputies McHugh and Doherty and the leader of Fianna Fáil.

Deputy Doherty will recall we had a short recess on Committee Stage during which members were contacted by members of the credit union movement. The sequence of events was that as the Bill was proceeding the Central Bank asked for additional powers of resolution to be applied to credit unions, which was done by way of amendment very late in the process. I understand the amendment was only circulated the day before the discussion took place. While it had been scrutinised, it did not have the benefit of a second look after reflection which normally happens with good legislation. I was very pleased with the interaction between Deputies. There is no politics or ideology in a Bill like this. We try to have the best legislation we can. If suggestions come from the Opposition, I am quite prepared to accept amendments or redraft them to make sure the spirit of what Deputies say is included in the Bill.

As there was some controversy on Committee Stage, rumours began to fly, most of which were not true. We had a free-flowing question and answer session in the Seanad and when I was asked a direct question about credit unions, I felt the easiest thing to do was to tell people what was happening. The interim report of the credit union commission is due for publication which will give the situation context. When I was in the Seanad there was a special meeting of my parliamentary party to discuss credit unions. I was contacted by Deputies from different parts of the House with different allegiances who wanted to know what was happening. The easiest solution was to tell them what the situation was and that there would be recapitalisation of the credit union movement.

It may have caused concern for credit union management but it did not cause concern for credit union depositors or shareholders because they immediately knew the State was prepared to invest a quantum of money their investment was secure, which was my intention. The interim report of the commission will be published on Friday by the commission. Deputies will get a lot of additional information and context on Friday about the situation.

Rumours can be quite damaging. Stories circulated that people would not be able to enjoy Christmas because the traditional temporary lending which they availed of from credit unions to pay for Santa Claus would not be available. It was reported that limits were so low credit unions would not be able to lend to the traditional creditors who sought loans at Christmas. That is not true.

It is true that the regulatory authorities have issued limits on the amount of lending that can be engaged in by credit unions. Some 50% of credit unions are subject to lending restrictions at the current time. Almost all credit unions with lending restrictions have a maximum individual loan size restriction. Claims were made in the Seanad and in newspapers that the Registrar of Credit Unions placed restrictions of approximately €1,500 per saver on a number of credit unions. It is not the case, even though it is widely believed that it is.

Some 70% of credit unions who have restrictions placed on them can lend up to €20,000 or more to an individual member. Only nine credit unions are restricted to loans of less than €10,000 to an individual member. Just one credit union is restricted to lending less than €5,000. The figures of €1,000 and €1,500 to which people referred are fictional. Facts always kill rumours and, therefore, I am trying to communicate as many facts as possible. I am very glad the commission's report will be available on Friday because it will give everybody who is interested in this debate a factual basis for the discussion to proceed.

I thank the Minister. I do not want to have a debate on credit unions but I look forward to reading the commission's report on Friday.

There is no problem with caps on lending being imposed when they are needed. However, the problem is some of the blunt instruments that are being used. At a time when we want to encourage lending in the economy and the Minister is having difficulties with banks meeting the lending requirements laid down, the idea of telling a credit union it cannot lend more than €10,000 to an individual does not make sense. A person may earn €250,000 per year, but because he or she has a car loan from a credit union in excess of €10,000, he or she cannot take out another loan. It is a blunt instrument which does not make any sense. Unfortunately, people are being caught in a spiral.

I will not second-guess the Minister on dampening down the concerns and fears created by the rumour mill. A report which is outdated remains unpublished and proposed recommendations that are unfounded. It used criteria that are not required. The contribution made by the Minister in the Seanad was based on the report. Rightly or wrongly, there is concern that the regulator will restructure credit unions to an extent that is not required to try to impose more control over the movement. While there is no doubt there is a need for some restructuring, there should be a balance. I and many other credit union members and managers are concerned. We will have a chance to debate the issue in the report is published.

I am a member of a very viable credit union. There is great concern among the officer board and members which I am sure reflects many credit unions across the country. They feel they are in a straitjacket because of the regulations imposed by the current regulator. They are prohibited in many cases from lending to very worthy applicants because of the current restrictions.

Many people who wish to borrow money are in the SME sector or need to make household improvements and have very good credit ratings. Families who have been long-time members of the credit union have excellent credit ratings. What is happening will affect people's credit ratings in the future. Credit unions do not object to regulation as long as it is balanced and appropriate.

Apart from the economic difficulties, the actions of the regulator are exacerbating the problems of credit unions and their members. The new lending situation is imposing individual loan limits irrespective of the creditworthiness of members. The regulator specifies the total amount of loans that can be issued in each month and links total loans issued to cash received without reference to assets, reserves or liquidity. The liquid cash available in my credit union totals €30 million but it is restricted.

All commercial business loans have been banned which affects the self-employed, tradesmen and farmers. Specific loan terms in addition to existing limits under the 1997 Act have been imposed. All these restrictions threaten the viability of credit unions by adversely affecting their most important source of income — loan interest. Curtailing their ability to lend curtails their ability to generate income, which is their lifeblood. Members with good repayment records are being forced in County Kerry to turn to money lenders. We cannot allow that situation to continue. In existing loans, there is inflexible interpretation of the rules on the bad and doubtful debts. Credit unions are unable to respond to members' need to reschedule loans and there is an overemphasis on writing off loans when long-term restructuring could resolve issues. Current income and potential future income is being eroded, draining the lifeblood of the credit unions and shrinking loan books. Action is needed and I welcome what the Minister is trying to do. A more flexible approach from the regulator is necessary as it is to allow the credit unions greater discretion to carry out their duties.

I ask the Minister for Finance to take these matters on board and will provide any information I have that might be helpful to him when it comes to amending the regulatory instruments.

I welcome the Minister's efforts since Committee Stage to come up with appropriate amendments that are generally accepted; that approach is to be welcomed.

The main point I am hearing from credit unions since the Committee Stage debate is an acceptance on their part of appropriate regulation and intervention. They are of the view that the scale of the problem is not as great as the Minister indicated in the Seanad. That remains to be seen and the detail of it must be worked out. It is important we bring certainty to the regulation of credit unions as quickly as possible but it is essential that as far as possible credit unions retain as much decision making power locally as possible because they know their customers best and a regulator setting particular limits in Dublin might not be the best way to go. There should be sufficient discretion at a local level where the credit union will know members personally and can make appropriate decisions, particularly when banks are not meeting the credit needs of the economy and our citizens.

The role of the credit unions is more important than ever now. I urge the Minister to continue to liaise with the sector and the representative bodies to come up with a framework that meets general acceptance. There are clearly credit unions in difficulty that need assistance but the vast majority are in good health and we should not unnecessarily interfere with their business model that has worked so well for many decades.

I welcome amendment No. 6. The credit union movement provides a vital role across the economy, particularly through their local ethos. That must be balanced by ensuring the credit union movement is financially sound. I welcome the appeal mechanism that is being considered by the commission and the Minister. An appeal mechanism might allow the regulator to do his or her job but allow an appeal after any examination. That would allow the regulator to do his job while allowing the credit union to put forward a case according to its circumstances. Such an appeal mechanism might work. Overall, we are all committed to the retention of the ethos of the credit union movement while balancing it with financially stability, collectively and individually. The credit union movement does outstanding work and I welcome this amendment.

I thank Deputies for their contributions. We all share the same objective; we want the ethos of the credit unions to continue while we want them to be solid and have deep roots in the modern financial world as they work in their communities.

Sometimes when only a few Members are in attendance in the Dáil, we think no one is listening and that the views expressed have no influence. I assure Deputies the regulatory authorities are aware of the views that were expressed on Committee Stage and will be aware of the views being expressed here as well. Deputies must not think they are not influencing the wider debate, they are.

There will be opportunities arising from this. Today we will finish Report and Final Stages and the report will be published on Friday. The report provides factual data from the Grant Thornton report and will give an up to date factual base for future debates. The level of detail in the report is admirable and will offer a clear view of the position of the credit union movement.

The report also makes a series of recommendations. The recommendations are for everyone but particularly for the Minister for Finance in terms of the legislation we are preparing for publication around Christmas. In the meantime, the commission will continue with its work because this is the interim report. It will then examine the wider issues of the place of credit unions in the financial services industry in future. It will issue a final report around Easter of next year with a final set of recommendations which we hope to incorporate into law. In the meantime, the Central Bank is the regulatory authority. The structure is the Governor of the Central Bank, Mr. Elderfield, the regulator, and specifically Mr. O'Brien, the registrar of credit unions. They are aware of Deputies' views and they keep up to speed on them.

I hope by this time next year we will have done good work where credit unions will be adequately provisioned while continuing with the ethos they always had, serving particular communities without too much dislocation. That is the objective.

Deputy Thomas Fleming raised particular cases. I have come across these arguments before and many of them were put forward by credit union management. They are not to be dismissed for that reason because who would know the state of credit unions better than management? We do not want, however, the situation to emerge where there is a conflict between the interests of management and the interests of depositors and share holders. Our primary purpose must be to protect those depositors and shareholders. There are good managers and bad managers and a few cowboys around. Part of the process will be to shake that out.

Deputy Fleming's contribution was laid out in a coherent manner. The commission is subject to submission from Members of the Oireachtas and the public. The Deputy should send a copy of his script to the commission and ask it to reflect on the issues raised and measure them against practice in other parts of the country. He could have an interchange with the commission as well as with me in the House.

Otherwise I am confident we have met the concerns raised on Committee Stage. I point out to Deputy Doherty that we covered consultation with the CUAC in the first amendment.

That is also included, in so far as the formation of regulations is concerned. Most of what is left is technical in nature.

Amendment agreed to.
Amendments Nos. 7 to 10, inclusive, not moved.

I move amendment No. 11:

In page 81, lines 12 and 3, to delete "by the Central Bank".

Amendment agreed to.

I move amendment No. 12:

In page 81, between lines 18 and 19, to insert the following:

"

1

Section 2(1), definition of “articles of association”, paragraphs (a) to (c)

Substitute:“(a) in the case of a credit institution that is established by charter, its bye-laws, and(b) in the case of a credit institution that is a building society, its rules;”.

".

Amendments Nos. 12, 13, 20, 21, 22 and 24 are being proposed to reflect the fact that upon enactment of this Bill, the credit unions will no longer fall within the scope of the Credit Institutions (Stabilisation) Act 2010. Therefore, these amendments delete those parts of the 2010 Act that were specific to credit unions.

The role of the 2010 Act is being taken by this Bill. References to credit unions will be removed from the 2010 Act.

Amendment agreed to.

I move amendment No. 13:

In page 82, between lines 6 and 7, to insert the following:

5

Section 3(c)

For “the Central Bank Act 1971, the Building Societies Act 1989 or the Credit Union Act 1997”, substitute “the Central Bank Act 1971 or the Building Societies Act 1989”.

Amendment agreed to.

I move amendment No. 14:

In page 83, to delete lines 53 to 56 and substitute the following:

"(b) the value of the shares acquired by or disposed of by the member—

(i) as at the date on which the shares were acquired or disposed of, as the case may be, and

(ii) as at the date on which the direction order concerned was made.".".

Amendment agreed to.

I move amendment No. 15:

In page 85, to delete lines 7 to 10 and substitute the following:

"(b) the value of the shares acquired by or disposed of by the member—

(i) as at the date on which the shares were acquired or disposed of, as the case may be, and

(ii) as at the date on which the special management order concerned was made.".".

Amendment agreed to.

I move amendment No. 16:

In page 85, to delete lines 23 to 26 and substitute the following:

"even though the making of that order would have the consequences of affecting (including reducing) the rights enjoyed by subordinated creditors before the order, but nothing in this subsection shall be taken as requiring the Minister to consider the possible adverse consequences of the order on the interests of a particular creditor or class of creditors of the relevant institution or to consider any submission made by a creditor on behalf of that creditor, a class of creditors or creditors generally.".".

The reason for this amendment is to achieve consistency between this Bill and the Credit Institutions (Stabilisation) Act 2010 with regard to the making of an order which might have the consequence of affecting the rights enjoyed by creditors before the making of the order.

The amendment provides that the Minister shall not be required to consider possible adverse consequences on the interests of a particular creditor or class of creditors or to consider any submissions from creditors when making a proposed subordinate liabilities order.

Amendment agreed to.

I move amendment No. 17:

In page 87, to delete line 34 and substitute the following:

"(b) the market value of those subordinated liabilities—

(i) as at the date or dates referred to in paragraph (a), and

(ii) as at the date on which the subordinated liabilities order concerned was made.".

Amendment agreed to.

I move amendment No. 18:

In page 87, between lines 43 and 44, to insert the following:

"

34

New section

After section 33, insert:“Relevant institution not to dispose of assets, liabilities.33A.—(1) Unless the Minister provides prior written consent, a relevant institution shall not dispose of any asset or liability which is to be transferred under a transfer order, except in the ordinary course of its business, during the period beginning with the delivery of the written notice under subsection (4) of section 33, or the date on which the relevant institution otherwise becomes aware of the proposed transfer order as part of the process of seeking its consent under that subsection, whichever is the earlier, and ending on the date of effect of the transfer order under section 34(7).(2) The officers and employees of a relevant institution shall comply with subsection (1).(3) If the Minister is of the opinion that a relevant institution is in breach of subsection (1) or has taken steps that would likely lead to such a breach, the Minister may apply ex parte to the Court for an order compelling compliance with that subsection.”.

".

Amendment agreed to.

I move amendment No. 19:

In page 89, to delete lines 41 to 44 and substitute the following:

"

(b) the value of the shares acquired by or disposed of by the member—(i) as at the date or dates on which the shares were acquired or disposed of, as the case may be, and(ii) as at the date on which the transfer order concerned was made.”.

42

Section 37(5)

Delete.

".

Amendment agreed to.

I move amendment No. 20:

In page 89, after line 57, to insert the following:

"

44

Section 39(5)

For “a credit union or a building society”, substitute “a building society” in each place where it occurs.

".

Amendment agreed to.

I move amendment No. 21:

In page 90, line 5, to delete "a credit union or a building society" and substitute "a building society".

Amendment agreed to.

I move amendment No. 22:

In page 90, lines 16 and 17, to delete "the Building Societies Act 1989 or the Credit Union Act 1997" and substitute "the Building Societies Act 1989".

Amendment agreed to.

I move amendment No. 23:

In page 90, between lines 42 and 43 to insert the following:

"

46

Section 47(1)

For “the Companies Acts, the Building Societies Act 1989 or the Credit Union Act 1997”, substitute “the Companies Acts or the Building Societies Act 1989”.

47

Section 50(2)

In paragraph (g), for “(S.I. No. 490 of 2009).” substitute “(S.I. No. 490 of 2009);”.After paragraph (g), insert:“(h) to dispose of some of the assets or part of the undertaking of the relevant institution, subject to such terms and conditions as are specified by the Minister, where, in the opinion of the Minister, the disposal is required in order for the relevant institution concerned to achieve—(i) a ratio the subject of a requisition under section 23 of the Central Bank Act 1971,(ii) a requirement as to the composition of the assets or liabilities of the relevant institution as specified by the Bank under section 23A of that Act.”.

".

This amendment will amend the Credit Institutions (Stabilisation) Act 2010 as follows. Item 46 removes the reference to the Credit Union Act 1997 in section 47(1). This reflects the fact that upon enactment of this Bill the credit unions will no longer fall within the scope of the 2010 Act. Therefore, the references to that Act become redundant.

Item 47 adds a new paragraph (h) to section 52 and makes a consequent amendment to paragraph (g). The covered banks are required to dispose of certain of their loan books to meet the loan to deposit ratio set by the Central Bank. To facilitate this process, the Minister has been provided with additional powers pursuant to this amendment to instruct the banks to dispose of assets to meet these ratios.

The issue of a requirement by the Minister pursuant to new paragraph 52(h) will allow a covered bank to take actions to meet its loan to deposit ratio without causing technical default under its contractual arrangements.

Amendment agreed to.

I move amendment No. 24:

In page 91, between lines 17 and 18, to insert the following:

"

49

Section 53(a)

For “the Companies Acts, the Building Societies Act 1989 or the Credit Union Act 1997”, substitute “the Companies Acts or the Building Societies Act 1989”.

".

Amendment agreed to.
Bill, as amended, received for final consideration.
Question proposed: "That the Bill do now pass."

While the recent amendments have made the legislation stronger and better, there is still fundamental concern regarding the fund. There is a need for a bank resolution Bill. While many of the tools in the Bill are unlikely ever to be used in the case of a bank, I believe they will be used in relation to credit institutions. They need to be there. We have advocated the inclusion of some of them but there remains a fundamental flaw in the Bill. The Minister for Finance, on behalf of the State, can inject our money into the fund, which would lead to the restructuring of the banks. It would be remiss of me and my party to support such a mechanism not knowing what the final cost would be of a major restructuring of one of the larger institutions if, God forbid, that were necessary some time in the future.

On that basis I oppose the passage of the Bill.

Question put.
The Dáil divided: Tá, 104; Níl, 25.

  • Bannon, James.
  • Barry, Tom.
  • Broughan, Thomas P.
  • Burton, Joan.
  • Buttimer, Jerry.
  • Byrne, Catherine.
  • Byrne, Eric.
  • Calleary, Dara.
  • Carey, Joe.
  • Coffey, Paudie.
  • Collins, Áine.
  • Conaghan, Michael.
  • Conlan, Seán.
  • Connaughton, Paul J.
  • Conway, Ciara.
  • Coonan, Noel.
  • Corcoran Kennedy, Marcella.
  • Costello, Joe.
  • Cowen, Barry.
  • Creed, Michael.
  • Daly, Jim.
  • Deasy, John.
  • Deering, Pat.
  • Doherty, Regina.
  • Donohoe, Paschal.
  • Dooley, Timmy.
  • Dowds, Robert.
  • Doyle, Andrew.
  • Durkan, Bernard J.
  • English, Damien.
  • Farrell, Alan.
  • Feighan, Frank.
  • Ferris, Anne.
  • Fitzgerald, Frances.
  • Fitzpatrick, Peter.
  • Flanagan, Charles.
  • Flanagan, Terence.
  • Fleming, Sean.
  • Grealish, Noel.
  • Griffin, Brendan.
  • Hannigan, Dominic.
  • Harrington, Noel.
  • Harris, Simon.
  • Hayes, Tom.
  • Heydon, Martin.
  • Howlin, Brendan.
  • Humphreys, Heather.
  • Humphreys, Kevin.
  • Keaveney, Colm.
  • Kehoe, Paul.
  • Kelleher, Billy.
  • Kenny, Seán.
  • Kyne, Seán.
  • Lawlor, Anthony.
  • Lynch, Ciarán.
  • Lynch, Kathleen.
  • McCarthy, Michael.
  • McConalogue, Charlie.
  • McEntee, Shane.
  • McFadden, Nicky.
  • McGrath, Michael.
  • McHugh, Joe.
  • McLoughlin, Tony.
  • McNamara, Michael.
  • Maloney, Eamonn.
  • Mathews, Peter.
  • Mitchell, Olivia.
  • Mitchell O’Connor, Mary.
  • Mulherin, Michelle.
  • Murphy, Dara.
  • Murphy, Eoghan.
  • Nash, Gerald.
  • Naughten, Denis.
  • Neville, Dan.
  • Nolan, Derek.
  • Noonan, Michael.
  • Ó Cuív, Éamon.
  • Ó Fearghaíl, Seán.
  • O’Donnell, Kieran.
  • O’Donovan, Patrick.
  • O’Mahony, John.
  • O’Reilly, Joe.
  • O’Sullivan, Jan.
  • Penrose, Willie.
  • Perry, John.
  • Phelan, Ann.
  • Phelan, John Paul.
  • Quinn, Ruairí.
  • Reilly, James.
  • Ring, Michael.
  • Ryan, Brendan.
  • Sherlock, Sean.
  • Shortall, Róisín.
  • Smith, Brendan.
  • Spring, Arthur.
  • Stagg, Emmet.
  • Stanton, David.
  • Troy, Robert.
  • Tuffy, Joanna.
  • Twomey, Liam.
  • Varadkar, Leo.
  • Wall, Jack.
  • Walsh, Brian.
  • White, Alex.

Níl

  • Boyd Barrett, Richard.
  • Collins, Joan.
  • Colreavy, Michael.
  • Daly, Clare.
  • Doherty, Pearse.
  • Ellis, Dessie.
  • Ferris, Martin.
  • Flanagan, Luke ‘Ming’.
  • Fleming, Tom.
  • Halligan, John.
  • Healy, Seamus.
  • Higgins, Joe.
  • Mac Lochlainn, Pádraig.
  • McGrath, Finian.
  • McGrath, Mattie.
  • McLellan, Sandra.
  • Murphy, Catherine.
  • Ó Snodaigh, Aengus.
  • O’Brien, Jonathan.
  • O’Sullivan, Maureen.
  • Pringle, Thomas.
  • Ross, Shane.
  • Stanley, Brian.
  • Tóibín, Peadar.
  • Wallace, Mick.
Tellers: Tá, Deputies Emmet Stagg and Paul Kehoe; Níl, Deputies Aengus Ó Snodaigh and Catherine Murphy.
Question declared carried.

The Bill will now be sent to the Seanad.

Sitting suspended at 1.20 p.m. and resumed at 2.30 p.m.
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