Having read a submission from the bankers' federation, I want to make a general point on this section. Some banks operating in Ireland, although supervised and regulated by the Central Bank, will be subject to fees while those operating in Ireland and supervised and regulated by central banks in other jurisdictions will not. I am not objecting to the fees. Is it the case that some banks which operate in Ireland may not be subject to regulation by the Central Bank at present? I thought that all banks which operated in the Irish jurisdiction were subject to regulation by the Central Bank, all branches of Irish banks which operate in the UK were subject to regulation by the Bank of England, and Irish banks in the US were subject to the regulatory authority there. The fact that banks operating in the Irish Republic, whose parent headquarters is not in Ireland, are not regulated or controlled by the Central Bank was news to me. Is that the case?
SECTION 18.
Yes. It is the home countries and not the host countries which supervise them under the European banking directive.
Therefore, is it the case that the operations of the two major Irish banks in the UK are not subject to control by the Central Bank of Ireland and the same applies elsewhere?
Yes. It is the same all round.
I can see the logic of it but I must confess that I had not thought about it. I thought that any bank which operated in Ireland was subject to the control of the Central Bank.
It used be so until 1992 but what I have outlined has been the case since the second banking directive in 1992.
I was in Government at the time but that is news to me. I am glad I learned that.
Time goes by so fast that one forgets, but did this committee deal with a Bill from the Department of Finance in the last 12 months about reciprocal arrangements between central banks? This certainly came up in discussion. Maybe I have the context wrong, but there was some matter, to which Deputy McCreevy referred, where we were dealing with this issue. I am not sure which Bill it was.
Was it subsequent on the BCCI business?
It could have been.
I am advised it was that the banks had to co-operate more.
We had a lengthy discussion about it at the time. For my own interest and to clear the matter in my mind, is it that although a bank is technically under its own central bank, because of the arrangements between the central banks it is in effect still governed to a degree by the central bank of the country in which it operates?
No. Not any more.
A bank is governed by the home country, not the host country. The host country's central bank is entitled to whatever information it needs about the banks operation but the bank is not actually governed or regulated by it.
I am sure all that was well teased out in the directive at the time, it is just that I was not aware of it. I can see that we should not have that debate again.