Bank can act against directors

The Central Bank of Ireland will be the only authority tasked with taking action against directors and board members of credit institutions when the new European-wide Single Supervisory Mechanism.

Speaking at the Deloitte Future of Prudential Regulation conference the deputy governor of the Central Bank, Cyril Roux, said the ECB will take over the power of fining banks for breaching EU capital rules, and the Central Bank will be “exclusively competent” for tackling people.

“The Central Bank will be exclusively competent to impose non-pecuniary administrative penalties on significant and less significant credit institutions. Again, the Central Bank may only open sanctioning proceedings against significant credit institutions upon the ECB’s instructions.

“The Central Bank will also be exclusively competent to impose administrative penalties on a natural person (eg. a member of the board of a credit institution). The ECB has no sanctioning role in relation to individuals,” he said.

Mr Roux described the challenges facing the Central Bank this year as “remarkable”. He noted that some of the Irish laws may have to be changed as the new division of powers between the ECB and the Central Bank will require clear legislation.

“The key element of this project is legislative in focus. We need to ensure that we identify the necessary legislative change that will need to be made at a domestic level to facilitate the coming into force of the Single Supervisory Mechanism,” he said.

He noted that before the ECB takes over their role as the supervisors of the Irish banks, they will have full visibility of the assets that the banks hold.

“The comprehensive assessment taking place on European banks includes the most stringent stress test to date. It will pave the way for the ECB to have full transparency of the health of the banking sector in advance of it assuming its duties in November 2014,” he said.