Vol. 562 No. 1
289 Mr. Durkan asked the Minister for Finance if he has satisfied himself regarding the adequacy of controls affecting the banking system, with particular reference to the need to prevent the reoccurrence of events such as the Allfirst matter; and if he will make a statement on the matter. [5678/03]
290 Mr. Durkan asked the Minister for Finance if sufficient banking controls now exist to protect against major risks in respect of the activities outside the State by banks which have overseas interests; and if he will make a statement on the matter. [5679/03]
291 Mr. Durkan asked the Minister for Finance if he has satisfied himself that the Central Bank now has adequate controls to protect the solvency of the banking system with a view to protecting consumers and investors here and abroad; and if he will make a statement on the matter. [5680/03]
I propose to take Questions Nos. 289 to 291, inclusive, together.
The Minister of Finance is responsible for the development of the legal framework governing the regulation of credit institutions carried out by the Central Bank of Ireland. Once the necessary legislative framework has been put in place, day-to-day responsibility for the supervision of credit institutions is a matter for the Central Bank. Thus, the Central Bank has independent statutory responsibility for regulating and supervising credit institutions so that their financial stability is maintained and that shareholders and depositors funds are protected. Therefore, my role in assessing the adequacy of controls affecting the banking system, including such matters as risks arising from overseas interests and regulation of solvency ratios, is to ensure that the legislative framework enables the Central Bank to perform its supervisory duties.
Irish legislation reflects the harmonised European framework for banking supervision, which is turn embodies the generally accepted international best practices. An IMF assessment in 2001 confirmed that banking supervision in Ireland is carried on in accordance with the Basel core principles, which comprise the relevant international standard.
Allfirst, while a part of the AIB group, was a separate legal entity incorporated in the US. Accordingly, the primary responsibility for the supervision of Allfirst lay with the US federal and State regulators. As part of the AIB group, it was subject to supervision by the Central Bank on the basis of its consolidated financial position. A key component of consolidated supervision involves establishing contact and information exchange with the host country supervisory authorities. In this regard, the Central Bank had maintained regular contact over a number of years with the US regulators of Allfirst bank. When the difficulties at Allfirst came to light, the Central Bank worked closely with the US authorities as part of the investigation team.
