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EU hands reins to regulators

THE Financial Regulator will gain unprecedented powers to take over ailing banks' affairs, parachute in new management and suspend dividend payments under new plans outlined by the EU executive yesterday.

It will be able to intervene even before banks breach capital and liquidity requirements, and will get extra clout where a lender is in danger of failure.

In a paper on crisis management, which will be followed by legislation next spring, the European Commission said supervisors should be able to force a business sell-off without shareholder consent, impose debt write-downs and create NAMA-style bad banks where an institution can't be liquidated under existing company law.

Where a bank needs to be wound down, supervisors will be able to order the replacement of senior managers.

Brussels said it is introducing the "intrusive" powers to make sure taxpayers are never again handed a trillion-euro bailout bill.

A spokesman for the Department of Finance told the Irish Independent the Government was "reflecting" on the proposals.

Irish Independent