The Government put €250 million into the Credit Institutions Resolution Fund which was established by section 10(1) of the Central Bank and Credit Institutions (Resolution) Act 2011 (as amended) (2011 Act). The purpose of the Resolution Fund under the 2011 Act is to provide a source of funding for the resolution of financial instability in, or an imminent serious threat to the financial stability of, an authorised credit institution. In particular the Resolution fund may be used for:
- the payment of financial incentives for transfers;
- providing capital for a bridge bank (details of a bridge bank are set out in Part 4 of the 2011 Act);
- meeting the expenses of the Central Bank incurred when discharging functions under the Act, and
- making certain payments under the Act, for example, the payment of expenses to an assessor appointed under the Act.
To date, the resources of the Resolution Fund have been utilised to fund the resolution of 4 credit unions. In the case of 3 of those credit unions, the resolution action taken was a directed transfer under the 2011 Act, and the Resolution Fund funded a financial incentive for the transferee. The remaining case was a liquidation, and no incentive was paid from the Resolution Fund in respect of that resolution. In each of the 4 cases, the Central Bank discharged its third party resolution related costs against the Resolution Fund.
The amounts paid or payable to date from the Resolution Fund for incentives in each of the 3 transfer resolution cases are as follows:
- Newbridge Credit Union Limited: €27 million
- Howth Sutton Credit Union Limited: €2.15 million
- Killorglin Credit Union Limited: €2.15 million
- Central Bank resolution related expenses that have been discharged against the Resolution Fund to date amount to €2.7 million.
To date €35.4 million has been drawn down from the Resolution Fund by way of expenditure relating to incentives for credit union resolution, Central Bank resolution related expenses and interest expenses.
The breakdown of expenses per year of operation of the Resolution Fund is as follows:
|
October 2011 to December 2012*
|
€1.3 million
|
|
2013
|
€26.9 million
|
|
2014
|
€6.9 million
|
|
2015 (YTD)
|
€0.3 million
|
The Resolution Fund has income over the period amounting to €29 million. This is made up of €23.7 million in levy income; €1.4 million in interest income; and €3.9 million in income estimated from the Newbridge Credit Union liquidation process.
Under Section 12(2) of the Resolution Act, as Minister for Finance I am entitled to be reimbursed from the Resolution Fund for all contributions to that Fund and for any financial incentive provided.
*The CIRF was established by the 2011 Act, and was only in operation from October in 2011; therefore the first set of published accounts for the CIRF relate to period from 28 October 2011 to 31 December 2012.
