The Central Bank
governor said today that Ireland's two biggest banks AIB and
Bank of Ireland, have passed its stress tests more severe than
those currently being carried out by the Committee of European
Banking Supervisors.
The new head of
financial supervision, Matthew Elderfield, had supervised stress
tests on Allied Irish Banks (AIB) and Bank of Ireland earlier
this year. The governor, Prof. Patrick Honohan, said in Dublin
today, that the European-wide tests covering 91 Eurozone banks to
be published on July 23rd had been extended to reflect events in
the sovereign debt markets and would reassure them about the
banks' health.
"It is a
good idea laying out the facts for the major banks. I think it
will go some way to removing exaggerated concerns about some
particular risks," Honohan, who is a
member of the European Central Bank's governing council, said at
the publication of the Central Bank's annual report.
The governor
said the revised plan put forward by Anglo Irish Bank on its
future was "more realistic" than an earlier restructuring
proposal which he termed "optimistic."
"Whatever
final solution is adopted, we will see certain entities emerging
from what was Anglo Irish Bank, at least two entities,"
he said.
The governor said
Ireland has made “significant progress” in tackling its
banking and fiscal problems. However, he added that it remains
critical that the Government does not deviate from the programme
of fiscal adjustment it has embarked on. He said the budget
plans were broadly on track.
Prof. Honohan said the focus internationally on the
sustainability of public finances has been at the centre of
renewed pressures in financial markets generally in Europe. Here
too, it is important to interpret data correctly. What might
broadly be described as IFSC (Dublin's offshore financial
centre) institutions represent a large and growing part of the
borrowing by Irish resident banks from the Eurosystem. For
this reason The Central Bank is nhancing its statistical
presentations to include a new table covering retail banking
institutions in Ireland and that table, to be published in the
monthly statistics, will give the best indication of Irish bank
liquidity conditions.
This move is long
overdue as the headline figure for Irish banks' foreign
borrowings, which includes units of foreign banks in the IFSC,
is invariably used and exaggerates the level of Irish
indebtedness.
The annual report published today, details the
Central Bank’s accounts. The bank’s profits for 2009 amounted to
€933.8m. After transfers to reserves, surplus income of €745.5m
will be paid to the Exchequer. The Bank’s balance sheet assets
at the end of 2009 amounted to just under €125bn reflecting the
continuing high levels of liquidity support by the Bank through
the Eurosystem to banks located in Ireland.
The
Central Bank's strategic review includes:
-
A refocused
approach to strengthening the financial system including a
new approach to financial stability assessment;
-
The
development of a new regulatory model with an enhanced
supervisory capacity for the detection and correction of
problems with an active and challenging approach;
-
Interacting
with new EU supervisory bodies, such as the European
Systemic Risk Board and the European System of Financial
Supervisors;
-
Building on
consumer protection including a review of the Consumer
Protection Code;
-
Greater
attention in economic research on the functioning of the
financial system and fuller collaboration with the
universities, ESRI and the wider public service;
-
Moving towards
a 100% charge back arrangement on the costs to industry to
reduce the cost to the taxpayer.
Annual Report 2009
