Dáil Éireann Debate, Thursday - 23 October 2014
64. Deputy Pearse Doherty asked the Minister for Finance the systems he has put in place to ensure that the structures of the relationship framework which determines the relationship between the bank and the Executive are being observed by State backed banks and that the governance of the bank is fit-for-purpose. [40724/14]
View answerAs the Deputy will be aware the Relationship Frameworks have been in place with the banks since March 2012. The Frameworks govern the relationship between the individual banks and the State and compliance with these agreements and each bank's various other commitments are monitored closely on both sides.
Officials from my Department meet with the senior management team in each of the banks regularly to be updated on a range of issues while these officials also maintain contact with other personnel in the banks to track events and decisions at the banks on a week to week basis.
As part of the banks' overall compliance procedures there is also regular internal reviewing of any legal agreements in place and any breaches must be reported to the Central Bank.
In addition the banks are subject to the provisions of the Central Bank of Ireland's Corporate Governance Code for Credit Institutions and Insurance Undertakings ('the Central Bank Code') the code is available on the Central bank website at:
http://www.centralbank.ie/regulation/poldocs/consultation-papers/Documents/CP41%20-%20Corporate%20Governance%20Requirements/Corporate%20Governance%20Paper%20-%204%20November%20(3)%20Amended%2023%20Feb%202011.pdf. The code sets out minimum statutory requirements on how banks and insurance companies should organise the governance of their institutions. The requirements include:
- Boards must have a minimum of seven directors in major institutions and a minimum of five in all others;
- Requirements on the role and number of independent non-executive directors;
- Criteria for director independence and consideration of conflicts of interest;
- Limits on the number of directorships which directors may hold in financial and non financial companies to ensure they can comply with the expected demands of board membership of a credit institution or insurance company;
- Clear separation of the roles of Chairman and CEO;
- A prohibition on an individual who has been a CEO, director or senior manager during the previous five years from becoming Chairman of that institution;
- A requirement that board membership is reviewed at a minimum every three years;
- A requirement that boards set the risk appetite for the institution and monitor adherence to this on an ongoing basis;
- Minimum requirements for board committees including audit and risk committees;
- A requirement for an annual confirmation of compliance to be submitted to the Central Bank.
