The draft legislation for a permanent special resolution regime for failing banks has been published (see here). The proposed legislation would replace the much-criticised emergency Credit Institutions (Stablisation) Act passed in December.
From a quick reading, the legislation appears a significant improvement on what it would replace. The Governor of the Central Bank rather than the Minister for Finance makes the decision to trigger the regime. The new legislation has well-defined triggers (Section 8), though it appears to leave a large amount of discretion with the Governor and lacks quantitative targets. There also appear to be reasonable provisions for creditor protection (e.g., the possibility to appeal to an independent valuer when forced transfers of assets or liabilities take place (Section 31)). I would be interested to hear opinions on whether these protections are sufficient.
Strangely, according to the Irish Times, the new legislation might not come into effect for domestic institutions until the end of 2012 (see here).
The legislation will not immediately apply to domestic institutions but covers all other banks authorised in the State, foreign owned subsidiaries and banks operating in the IFSC.
Allied Irish Banks, Bank of Ireland, Anglo Irish Bank, Irish Nationwide, EBS and Irish Life and Permanent are covered by the Credit Institutions (Stabilisation) Act which was introduced late last year.
The objective of the new legislation is to shift the Irish institutions falling under the Credit Institutions (Stabilisation) Act to being covered by the Central Bank and Credit Institutions (Resolution) Bill before the end of 2012.
Update: Some additional useful links:
Simon Carswell gives his reaction here. Suzanne Lynch provided a good overview of special resolution regimes after the emergency bill was published in December. As linked to many times on this site before, Peter Brierley provides an indispensible international comparison of SRRs, with a focus on the UK’s regime. The original emergency legislation — which remains in effect until the end of 2012 — is available here.