Seanad Éireann debate -
Wednesday, 21 Jul 1971

Vol. 70 No. 17

Central Bank Bill, 1969: Committee Stage (Resumed).

Question proposed: "That section 11 stand part of the Bill."

Mr. O'Higgins

On this section I wish to make two short points. In case it should be misunderstood, seeing that I spoke strongly in favour of the amendment to this section, the reason I did not vote was simply because I was paired and was not permitted to vote. It was not a case of boycotting the vote in any sense.

On the other point, the Minister has been good enough to give me the explanation. It might be pinpointed because it is not clear at this stage in the Bill. The attaching of conditions to licences in section 10 does not in section 11 appear as a ground of revocation—that the holder failed to comply with a condition attaching to the licence. I understand that the reason for that is that one of the later sections makes it an offence not to comply with a condition—that is section 58—and that section 11 will require a conviction for an offence under the Bill. Consequently, the position is that, if a person fails to comply with a condition attached to a licence under section 10, it will not ipso facto be grounds for revocation of a licence under section 11; but if a person is convicted of failure to comply with a condition as an offence under the Bill then the power of revocation under section 11 will exist. I believe that is a correct summary of the position.

Mr. Colley

That is so. Section 58 is the one which provides for the offence of non-compliance with a condition in a licence.

Mr. Russell

Could I ask the Minister, on paragraph (h) of this section, if the holder is a company or a corporate body and a member of its staff is guilty of an offence is the holder guilty?

Mr. Colley

No. The holder as a company would not necessarily be liable because a member of the staff had committed an offence.

Question put and agreed to.

SECTION 12.

Question proposed: "That section 12 stand part of the Bill."

Mr. Russell

What do the words "in such manner as it thinks fit the names of the holders" mean? Would that section not be quite clear without inserting those words? The names of the holders seems quite adequate without "in such manner" unless he intends to put in a nom de plume.

Mr. Colley

I think "in such manner as it thinks fit" refers to publish. Heretofore, the names of licence holders have not been available to the public, but it is intended under this section to make them available as a matter of public knowledge. This phrase refers to the manner in which the publication would take place.

Mr. O'Higgins

The Minister is quite clear that it is not intended to follow the practice in connection with planning applications and use the first official language on certain occasions.

Mr. Colley

I would not preclude the use of the first official language in connection with the implementation of section 12 nor would I preclude the use of the second official language or both.

Mr. Russell

Either would be satisfactory.

Mrs. Robinson

Subsection (2) of section 12 states:

The bank shall as soon as may be after the revocation of a licence publish notice of the revocation in such manner as it thinks fit.

Might I refer to the comments made by the Minister in relation to the last amendment, which he did not deem fit to accept? The Minister was asked about the fact that, if a licence was revoked, the revocation would take effect immediately. Here we have a provision that as soon as may be notice will be published of this revocation. This would create one of the problems that the amendment was introduced to obviate. The amendment sought the possibility of suspending the revocation pending a hearing in the court. If the person who held the licence being revoked wished to dispute that and wished to go to the court, either to test the constitutionality of the Act or the evocation, and if the bank has already publicised the revocation of the notice, this could cause great hardship. Even if the court finds in his favour, this will not redeem the fact that the revocation has already been publicised. I would ask for clarification as to whether there is any way of delaying the notice of the revocation if it is known that the person would seek to dispute either the constitutionality of the section under which the revocation was made or would seek in some indirect way to have recourse to the courts, since there is no recourse under the section itself.

Mr. Colley

I would remind the Senator, under section 11, subsection (2), there is a procedure laid down that whenever the Bank proposes to revoke a licence it is obliged to give notice in writing to the holder of the licence that it intends to seek the consent of the Minister to the revocation and of the reasons for the revocation; that the holder has 21 days thereafter in which to make representations in writing to the Minister and that the Minister must consider such representations before deciding on the revocation. Therefore, the holder has notice of the Bank's intention to revoke the licence. The notice is such that the holder has ample time, if he wishes to apply to the court either at that stage or immediately after the determination by the Minister, for an injunction. I would think that such an application would certainly receive considerable publicity.

Mr. O'Higgins

In relation to subsection (3), would it not be necessary to impose an obligation on the Bank to notify the various registrars and officers of the revocation of a licence? I am thinking of the kind of situation where the Bank publishes in a way which, for some reason or other, does not come to the notice of these officers. Does it not seem to be necessary to provide that the Registrar of the Supreme Court will in fact be informed of the revocation of licences?

Mr. Colley

Yes, I would agree with he Senator. The wording in subsection 3) implies that, I think, because there an obligation to inform them of the the names of licence holders. Therefore, if the information has been furnished to the Registrar previously in relation to the holder of a licence whose licence is then revoked, it seems to me to imply the obligation to inform the Registrar of the revocation of the licence because that person is no longer a holder of a licence.

Mr. O'Higgins

I do not want to assume a judicial mantle here but I doubt if I would agree with the Minister here. It would seem to me that the obligation under subsection (3) is discharged when the notification is given of the holders. If there is a subsequent withdrawal, unless there is a definite obligation on the Bank to notify these officers of the withdrawal, a situation could arise where there is an incorrect list of holders in the possession of the Registrar of the Supreme Court and the other officers concerned. It is a thing that should be looked at anyhow.

Mr. Colley

If the Senator is correct in his interpretation of subsection (3). In any event the purpose of notifying the Registrar is to ensure that the courts will be in a position to notify the Central Bank of any judgements or decrees issued against a licence holder. Even if the Senator's interpretation of subsection (3) is correct I do not think there is any damage done by reason of the fact that there is a decree obtained against the person who was a licence holder and whose licence is revoked, this will not be of any significance in relation to the operations of the Central Bank under this Bill.

Mr. O'Higgins

What right has the Registrar to notify the Central Bank of a decree obtained against a person who is not a licence holder?

Mr. Colley

If he is not a licence holder?

Mr. O'Higgins

Yes.

Mr. Colley

Is it an infringement of that person's rights.

Mr. O'Higgins

It might conceivably be.

Mr. Colley

I cannot conceive of it myself. Proceedings will already have been published.

Mr. O'Higgins

They might not be. Not all of them would be published.

Mrs. Robinson

I am not quite satisfied with the Minister's reply to the question I raised on section 12, subsection (2). The Minister will accept that when the Bank proposes to revoke a licence under section 11 subsection (2), and the person is notified and wishes to make representations to the Minister, there is a period there and the Minister said that at that stage the person could have recourse to the court. He will accept that no court would take jurisdiction; it is a matter for the Minister.

Mr. Colley

I would accept that.

Mrs. Robinson

When the Minister has come to a decision on that the wording of section 12, subsection (2), is that the bank then revokes the licence and publicises the revocation. Unless somebody was extremely swift in instituting proceedings in some way there would be a publicised revocation of their licence and no leeway in appealing to the court, as I tried to provide in the amendment.

Mr. Colley

I should think all that would be required there would be for the licence holder to inform the Bank that he intended to apply to the court in the event of an unfavourable decision by the Minister.

Mrs. Robinson

I should like to feel that, even though the amendment was not accepted, the spirit of the amendment would be possible—that it would be possible to have an informal arrangement with the Bank.

Mr. Colley

I will put it further than that. It should be realised that the question of the revocation of a licence is so serious that it is unlikely ever to arise; but in the event of its arising it would be a very serious case in which one could be almost certain that the licence holder could not have a hope of succeeding by any appeal to the court. It would be a very rare occurrence. The Central Bank would be very loathe to take this action, but the remedy must be there. The concern which is being expressed here, while perhaps justifiable, is concern in respect of a situation that, almost certainly, will not arise. The House may take it that the approach of the Central Bank in this matter will certainly be one of regard to the rights of a licence holder. I could not conceive of a situation in which, if a licence holder, having got notice of intention to revoke the licence, notified the Central Bank of his intention to apply to the courts, the Central Bank would rush ahead to publish notice of the revocation in such circumstances. It is quite inconceivable to me that that would happen.

Mrs. Robinson

Certainly that does nullify the meaning of the words "shall as soon as may be" if there is this leeway.

Question put and agreed to.

SECTION 13.

Mrs. Robinson

I move amendment No. 3:

In subsection (3) to add after "increase" in line 38 the following:—"If the amount of the deposit exceeds the amount required under subsection (2) of this section the Bank shall pay out the surplus at the request of the holder of such licence in the Bank not later than seven days after the date of the receipt by the Bank of such request."

I have moved this amendment in a spirit of justice to the banks as well as realising that it is proper the Central Bank should have the power to require that the deposit be maintained at a certain percentage and should have the power to call upon the banks to do this. Subsection (3) reads:

The amount of the deposit shall, where necessary, be increased to the appropriate amount re-calculated under subsection (2) of this section by the holder of the licence concerned not later than seven days after the date of the receipt by him of notification from the Bank of the amount required to effect the increase.

The amendment proposes to add:

If the amount of the deposit exceeds the amount required under subsection (2) of this section the Bank shall pay out the surplus at the request of the holder of such licence in the Bank not later than seven days after the date of the receipt by the Bank of such request.

It may be an unlikely circumstance, but it is certainly not one that is beyond our powers to imagine, and if the amount deposited exceeds the amount required under subsection (2) of this section then I think in justice that the Bank should be required, if requested to do so, to pay out the surplus amount. In relation to large banking concerns that might be quite a substantial amount and might make a difference to their fluidity. Surely, on the basis of reciprocity and fairness, if they are required to bring up the amount of the deposit within seven days to a fixed figure, if the amount when the calculation is made exceeds that figure, then I cannot see why, at their request, payment should not be made. This is my reason for inserting the amendment.

Mr. Colley

I do not think this amendment is necessary, because the kernel of the provision is that if a bank has an excess deposit, that excess ceases to be part of the statutorily required deposit under the section and becomes an ordinary deposit, which can be drawn down on demand by the bank. Therefore, I do not think this is necessary. In practice, a fair rate of interest is paid on money deposited by banks with the Central Bank, whether part of the statutory deposit or otherwise. Also, most banks maintain deposits with the Central Bank in the ordinary course. As a practical matter I think we can assume that many licence holders would prefer to leave the excess with the Central Bank, earning interest to cover possible future deficiencies, rather than to be put to the trouble of making regular adjustments in line with short-term fluctuations in their businesses. Therefore, in practice most licence holders would not require this; but, if they do, they already have it, as the position is that they can withdraw the money if they want to.

Mrs. Robinson

In view of the Minister's explanation of this, and in view of the fact that any amount exceeding the deposit required would no longer form part of the deposit under this section and could be withdrawn, I withdraw this amendment.

Amendment, by leave, withdrawn.

Question proposed: "That section 13 stand part of the Bill."

Mr. Russell

How is the maximum figure of £500,000 in subsection (1) arrived at? That would be quite a small proportion of the reserves and net assets of either of the two big banking groups; but it might be a very substantial proportion of the assets of a smaller banking group. Should there not be some relationship between the deposit and the reserves and assets?

Mr. Colley

The primary purpose of these deposits is the protection of deposit holders with the commercial banks. In the case of the maximum deposit of £500,000, this is quite substantial to meet the normal claims that would arise. On the other hand, the larger the banking group, the bigger the spread of the corporations, the less risk there is to the depositor. Proportionately, the degree of protection required by the depositor is not as great in dealing with a very large bank as in dealing with a small bank, in modern circumstances in this country. That is the reason behind it. It does not follow that the deposit has to be in proportion all the way, but the figures are arrived on the basis of trying to be fair both to the public, who require protection, and to the commercial banks themselves. I think the figures reach a reasonable level of compromise between these two requirements.

Question put and agreed to.

Section 14 agreed to.

Progress reported; Committee to sit again.

The Seanad adjourned at 10.30 p.m. until 10.30 a.m. on Thursday, 22nd July, 1971.