Seanad amendments Nos. 1, 4 and 6 are related and may be discussed together.
Central Bank (Supervision and Enforcement) Bill 2011: Amendments from the Seanad
Amendments Nos. 1 and 6 simply correct a section number reference in section 1 and in the Second Schedule.
Amendment No. 4 is a technical amendment to section 6 of the Irish Bank Resolution Corporation Act 2013 and relates to the Bankers' Books Evidence Act 1879. The Bankers' Books Evidence Acts provide for a procedural admissibility of evidence rule. This is one of the permitted exceptions to the hearsay evidence rule and facilitates the admissibility of bankers books into evidence in all legal proceedings. This amendment mirrors a similar provision in section 191 of the National Asset Management Agency Act 2009.
Does amendment No. 4 on the Bankers' Books Evidence Act 1879 - I would be the first to acknowledge that I am not terribly familiar with it - relate to any issue that has been raised with the Department concerning the admissibility of evidence? Is it something officials have identified themselves or is it something that has arisen in the course of ongoing investigations?
The note indicates that section 3 of the Bankers' Books Evidence Acts provides that "a copy of any entry in a banker's book shall in all legal proceedings be received as prima facie evidence of such entry, and of the matters, transactions, and accounts therein recorded". Section 4 of the Bankers' Books Evidence Acts provides for the admissibility of bankers' books evidence, as an exception to the hearsay rule. Section 4 requires that the evidence was created by the bank in the ordinary course of business, is still in the custody of the bank and that the evidence be given by an officer of the bank. The Attorney General's office has advised on the inclusion of this amendment as an avoidance of doubt provision. That is the reason for it. It does not relate to any specific issue.
I seek clarification. As the Minister indicated, the original Act that is referenced dates back to 1879 so the definition of bankers' books is within the meaning of that Act from 140 years ago. Could he explain the position? I do not wish him to dig up the 1879 Act but what are the bankers' books within the meaning of the Act?
They are records of transactions in a bank in written form, which could be used subsequently and would have an evidential quality and could be brought forward as an exception to the hearsay rule once we enact the Bill. As I said previously, it mirrors section 191 of the National Asset Management Agency Act 2009. On reviewing the Bill at this Stage, the Attorney General's office advised that the amendment should be tabled. She calls it an avoidance of doubt provision.
Seanad amendments Nos. 2 and 7 are related and may be discussed together.
These amendments to the Central Bank Act 1971 provide for an authorisation regime for branches of third country banks. These branches would be subject to the same standard of regulation as those branches currently passporting into Ireland from within the EU. The Central Bank Act 1971 provides the statutory basis for the authorisation regime for credit institutions in Ireland. The 1971 Act and the related European directive - the capital requirements directive - also provide the basis for the so-called passporting regime within the European Union. Passporting is a system which allows financial services operators legally established in one member state to establish and provide their services in the other member states without further authorisation requirements.
These amendments insert three new sections into the Central Bank Act 1971 to provide an authorisation regime for credit institutions which are authorised outside the European Union to operate a branch in Ireland. These third country banks would be able to apply to the Central Bank for an authorisation on the basis that the institution would remain under the responsibility of its home regulator in terms of prudential regulation, but would be subject to Central Bank rules on conduct of business. The new section 9A provides that the Central Bank can only grant an authorisation where the credit institution is subject to a regulatory system in its home territory which is at least as robust as the Irish system. Furthermore, the level of protection afforded to deposits by virtue of the bank's authorisation in its home country must be at least as robust as that which operates in Ireland under the deposit guarantee scheme. The Central Bank is also required to notify the relevant European authorities of any authorisation under this section. This arises from the requirement in the directive that third country branch authorisations should not offer more favourable terms to credit institutions passporting from outside the European Union than would be available within the EU. This will act as a further check on the system to ensure that this regime does not act in any way to dilute the standard of regulation that applies.
The new section 9B sets out the provisions that are to apply where the Central Bank refuses a grant of authorisation and it is based on the system that already applies to domestic credit institutions.
It is good to hear that other financial institutions are seeking to set up in Ireland. I hope that they will provide opportunities for many of those who have lost their jobs. I am conscious of the announcement in recent weeks of 1,800 job losses at Ulster Bank.
The Minister stated that the regulatory provisions would need to be of a corresponding nature to those that exist in the State. Institutions would not be licensed or granted authorisation unless there was a regime of regulation of significant strength in the home territory. Does subsection 3(a) address this matter and stipulate that provisions must be of a corresponding degree? It states: "and supervision corresponding to those in the State." It seems that the institution must be supervised and have authorisation to carry on banking business in this State. Perhaps I am reading the wrong section, but it does not state the strength or force of the supervision.
If a corresponding regulatory regime is required, would that rule out many third countries that do not have the same type of regulatory regime as Ireland or are they more advanced than we are?
Subsection 3(a) states:
the relevant credit institution is subject, in the state or territory where its head office is located, to regulatory or administrative provisions relating to authorisation to carry on banking business in that state or territory and supervision corresponding to those in the State,
It is caught in the phrase "supervision corresponding to those in the State".
I seek clarification. I am sure that I am wrong, but the subsection states:
the relevant credit institution is subject, in the state or territory where its head office is located [we are referring to the foreign country], to regulatory or administrative provisions relating to authorisation to carry on banking business in that state [which is the foreign state] or territory and supervision corresponding to those in the State,
Should the supervision not correspond with this State's or is that not what we are doing in subsection 3(a)? Does the Minister understand what I am trying to say? It seems to read as if the institution needs authorisation to carry out banking business in the state or territory and must have supervision corresponding to those in that state, but the word "state" appears three times in this subsection. Since two are clearly references to the foreign state, is the third reference to this State?
The capital letter indicates that we are talking about Ireland, that is, the "State".
That is news to me.
Well spotted.
This technical amendment involves an amendment to section 47 of the Central Bank and Credit Institutions (Resolution) Act 2011. It is a drafting amendment and is consequential on changes made to section 46 of the 2011 Act on Report Stage in this House.
Seanad amendment agreed to.
7 |
Section 33AK (5) |
Substitute “2010, or” for “2010.” in paragraph (ao) and insert the following after that paragraph: “(ap) for any purpose connected with the functions of the Bank, the Minister, the Governor or the Head of Financial Regulation or a special manager under the Central Bank and Credit Institutions (Resolution) Act 2011.”. |
This amendment is also technical in nature and is designed to remedy an incorrect reference in the Central Bank and Credit Institutions (Resolution) Act 2011. The objective is to ensure that the Central Bank is legally able to share confidential information to facilitate the Central Bank, the Minister, the Governor, the head of financial regulation or a special manager appointed under the resolution Act in the performance of its, his or her functions under the Act. This should remove any obstacle to the necessary information exchange.
1 |
Section 2(1) |
(a) In paragraph (d) of the definition of “related body” substitute “Part 3 of the Central Bank (Supervision and Enforcement) Act 2013” for “Part 5 of the Central Bank Reform Act 2010”. (b) Insert the following definition: “ ‘European Banking Committee’ means the committee established pursuant to Commission Decision 2004/10/EC1;”. |
2 |
Section 7 |
In subsection (1) delete “on behalf of any other person”. |
3 |
Section 10 |
Insert “or authorisation under section 9A(2)” after “licence” in each place. |
4 |
Section 12 |
(a) In subsection (1) insert “and of the holders of authorisations under section 9A” after “licences”. (b) In subsection (2)-- (i) insert “or authorisation under section 9A” after “licence”, and (ii) insert “European Banking Committee” after “European Commission”. (c) In subsection (3)-- (i) insert “and of the holders of authorisations under section 9A” after “licences”, and (ii) insert the following after paragraph (d): “(dd) the European Banking Committee;”. |
5 |
Section 17 |
(a) Insert “or authorisation under section 9A” after “licence” in each place. (b) In subsection (1) insert “or holders of authorisations under section 9A” after “licence holders”. |
6 |
Section 18 |
Insert “or authorisation under section 9A” after “licence” in each place. |
7 |
Section 19 |
(a) In subsection (1)-- (i) insert “or authorisation under section 9A” after “a licence”, and (ii) insert “or authorisation” after “the licence”. (b) In subsection (2) insert “or authorisations under section 9A” after “licences”. |
8 |
Section 20 |
Insert “or authorisation under section 9A” after “licence” in each place. |
9 |
Section 21 |
Insert “or authorisation under section 9A” after “licence” in each place. |
10 |
Section 22 |
Insert “or authorisation under section 9A” after “licence” in each place. |
11 |
Section 25 |
Insert “or authorisation under section 9A” after “licence” in each place. |
12 |
Section 26 |
(a) In subsections (1), (2), (3) and (6) insert “or authorisation under section 9A” after “licence” in each place. (b) In subsection (4) insert “or authorisations under section 9A” after “licences”. |
13 |
Section 27(2) |
In paragraph (a) insert “or authorisation under section 9A” after “licence”. |
14 |
Section 28(1) |
Insert “or authorisation under section 9A” after “licence”. |
15 |
Section 31 |
Insert “or authorisation under section 9A” after “licence” in each place. |
A message will be sent to Seanad Éireann acquainting it accordingly.