Dáil Éireann Debate, Tuesday - 23 October 2012
176. Deputy Clare Daly asked the Minister for Finance his view on the fact that as some or all of the recapitalised banks were trading while insolvent, and were therefore in breach of the statutory obligations under Company law and otherwise, the actions that have been taken or are being taken with respect to such banks and the personnel involved. [46253/12]
View answerAs the Deputy will be aware, the Irish banks were required to raise €24.0bn in capital following the 2011 Prudential Capital Assessment Review (PCAR) in order to remain above a minimum capital target of 10.5% Core Tier 1 in the base scenario and 6% Core Tier 1 in the stress scenario. There are a number of tests for solvency set out in company law. These solvency tests must be distinguished from the requirements of PCAR (which tests capital adequacy). The concept of trading while insolvent is one of company law while the PCAR is a test which set down by the Central Bank. It is not the case that a bank which does not meet a capital adequacy requirement is automatically trading while insolvent. While the recapitalised banks required fresh capital to meet the various capital adequacy requirements set by the Central Bank it is not the case that those banks were trading while insolvent. Enforcement action in respect of breaches of company law are a matter for the Office of the Director of Corporate Enforcement.
