Dáil Éireann Debate, Wednesday - 8 February 2012
41 Deputy John Paul Phelan asked the Minister for Finance the specific assessment of how well each of the banks operating in Ireland is complying with solvency and liquidity requirements; and what were the specific criteria assessed in regard to the Irish banks. [6984/12]
View answerThe solvency stress test applied by the Central Bank of Ireland (CBI) in 2011 was used to recapitalise the Irish guaranteed institutions. The stress test scenarios were designed to represent extreme but plausible events, but they were not forecasts. The macroeconomic environment deteriorated in 2011 and as a result, arrears levels and loan loss provisioning has increased. As the realised scenario in 2011 was within the bounds considered for the purposes of recapitalising the banks in 2011, the Central Bank is currently of the view that the banks are adequately capitalised. The CBI is preparing for the 2012 Financial Measures Programme, including the development of an updated solvency stress test. As regards liquidity, the CBI's current liquidity requirements are contained in the published document ‘Requirements for the Management of Liquidity Risk June 2009'. These requirements consist of both qualitative and quantitative requirements for all regulated Credit Institutions. As the Irish banks themselves are regulated entities, they are similar to any other regulated credit institution and are bound by the above referenced document. In addition to these requirements, those Irish banks covered by the Financial Measures Programme have additional liquidity requirements in terms of reporting and metrics including the requirement to achieve a loan to deposit ratio of 122.5% by end 2013.
