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Ireland looks to Canadians for new banking regulator model
By Louisa Nesbitt |
March 2, 2009, Monday
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Print Edition
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IRELAND plans to create a new commission for banking regulation, seeking to end what Prime Minister Brian Cowen said has been a "sorry chapter" for the nation's lenders.
"There will be radical reform of the system," Cowen said late yesterday at the annual conference of his ruling Fianna Fail party in Dublin.
The Central Banking Commission "will have new powers for ensuring the financial health, stability and supervision of the banking and financial sector."
Ireland's banks have been battered by the global credit crisis and face rising bad debts as the domestic property market slumps. At the same time, a series of scandals that have led to resignations across the industry have marred the sector's reputation.
The government has promised 7 billion euros (US$8.9 billion) to bail out Ireland's two biggest lenders, Bank of Ireland Plc and Allied Irish Banks Plc, and has nationalized a third, Anglo Irish Bank Corp. Last week police searched Anglo's offices as part of an investigation by the country's corporate enforcement agency.
A sorry chapter
The commission will incorporate the responsibilities of the central bank and the financial regulator, Cowen said in the speech, which Bloomberg News received by e-mail.
The reforms will begin within weeks and "will mark an end to a sorry chapter in Irish banking history," he said.
The commission will be similar to the model used in Canada, where banks have avoided government bailouts and possess only a fraction of the debt-related writedowns recorded globally.
Bank of Nova Scotia Chief Executive Officer Richard Waugh last week said that Canada's model is "worth careful consideration" when looking at "ways to improve the global financial sector."
As the Prime Minister battles to save the nation's banks, Cowen is also grappling with a soaring budget deficit, the threat of a credit rating downgrade and public anger over proposed tax increases.
Ireland's economy is shrinking at the fastest pace in the euro area and more than 100,000 people marched in Dublin last week against government budget plans.
The government aims to "restore balance" to the public finances by 2013 through a combination of higher taxes and increased spending cuts, Cowen said.
Ireland budgeted for 55 billion euros in spending this year and expects to raise a maximum of 37 billion euros from taxes, leaving a shortfall of 18 billion euros.
"Everyone will need to pay more," the Prime Minister said. "While no one can be insulated from this reality, we will seek to do it in a fair way that is based on ability to pay."
"There will be radical reform of the system," Cowen said late yesterday at the annual conference of his ruling Fianna Fail party in Dublin.
The Central Banking Commission "will have new powers for ensuring the financial health, stability and supervision of the banking and financial sector."
Ireland's banks have been battered by the global credit crisis and face rising bad debts as the domestic property market slumps. At the same time, a series of scandals that have led to resignations across the industry have marred the sector's reputation.
The government has promised 7 billion euros (US$8.9 billion) to bail out Ireland's two biggest lenders, Bank of Ireland Plc and Allied Irish Banks Plc, and has nationalized a third, Anglo Irish Bank Corp. Last week police searched Anglo's offices as part of an investigation by the country's corporate enforcement agency.
A sorry chapter
The commission will incorporate the responsibilities of the central bank and the financial regulator, Cowen said in the speech, which Bloomberg News received by e-mail.
The reforms will begin within weeks and "will mark an end to a sorry chapter in Irish banking history," he said.
The commission will be similar to the model used in Canada, where banks have avoided government bailouts and possess only a fraction of the debt-related writedowns recorded globally.
Bank of Nova Scotia Chief Executive Officer Richard Waugh last week said that Canada's model is "worth careful consideration" when looking at "ways to improve the global financial sector."
As the Prime Minister battles to save the nation's banks, Cowen is also grappling with a soaring budget deficit, the threat of a credit rating downgrade and public anger over proposed tax increases.
Ireland's economy is shrinking at the fastest pace in the euro area and more than 100,000 people marched in Dublin last week against government budget plans.
The government aims to "restore balance" to the public finances by 2013 through a combination of higher taxes and increased spending cuts, Cowen said.
Ireland budgeted for 55 billion euros in spending this year and expects to raise a maximum of 37 billion euros from taxes, leaving a shortfall of 18 billion euros.
"Everyone will need to pay more," the Prime Minister said. "While no one can be insulated from this reality, we will seek to do it in a fair way that is based on ability to pay."
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