New powers for Central Bank

Finance Minister Michael Noonan Photo: Collins

Independent.ie reporters

May 24 2011 01:27 PM

The Central Bank has been given new powers to deal with failing banks, building societies and credit unions.

The new bill allows the Central Bank to wind down lenders or transfer their assets to another institution and also provides for a bank levy.

Launching the Central Bank and Credit Institutions Bill 2011, Minister for Finance Michael Noonan said the bill is “an important step” in ensuring the Central Bank can deal with failing banks promptly and effectively.

"The purpose of the bill is to provide for a ‘main stream’ long term special resolution regime for credit institutions in the State," he said.

"I am preparing committee stage amendments to the Bill, which are designed to enhance the resolution toolset in line with the evolving EU principles on crisis resolution and in the light of discussions with the external partners.”

It will also allow the Central Bank to ask the High Court to appoint a special manager to an institution or transfer some or all of its assets or wind it down.

The bill also covers the establishment of a “bridge bank which would temporarily hold some or all of an institution's assets or liabilities before transfer.