Anglo None Compliant

The Irish Bank Resolution Corporation (IBRC) is not compliant with the Central Bank’s regulatory requirements needed for a banking licence, although it is not expected that it will have any implications for its operating model.

The fact was disclosed in the Central Bank’s interim report, released last June. 

Finance Minister Michael Noonan, confirmed that IBRC is still not meeting these requirements in response to a parliamentary question posed by Sinn Féin’s Pearse Doherty this week. 

“IBRC currently has a banking licence and is regulated by the Central Bank of Ireland. However, I have been advised that as disclosed previously in the bank’s published accounts, as it is an organisation in wind down, IBRC is not in full compliance with Irish regulatory requirements,” the minister said. 

In its last set of accounts, IBRC stated that, “regulatory compliance risk primarily arises from a failure or inability to comply fully with the laws, regulations, standards or codes applicable specifically to regulated entities in the financial services industry”. 

“The bank continues to operate as a regulated entity and, as such, is therefore subject to certain minimum prudential and other regulatory requirements. At Jun 30, 2012, the bank is not in full compliance with all Irish regulatory requirements. While the bank ensures that the relevant authorities are kept fully informed in this regard, noncompliance may result in the group being subject to regulatory sanctions, material financial loss and/or loss of reputation,” it said.

“Capital risk is the risk that the group has insufficient capital resources to meet its minimum regulatory capital requirements. Losses incurred by the bank in recent years have placed significant stress on the bank’s regulatory capital resources and resulted in the minister for finance, as the bank’s sole shareholder, providing €29.3bn of capital. 

“The group’s total capital ratio at Jun 30, 2012, is 15.7%. Further losses, as well as any increased capital requirements, could again lead to regulatory capital concerns in the future. ” 

The Central Bank declined to comment whether this failure to meet the regulatory requirements would result in any sanctions. However, IBRC needs a banking licence to access credit facilities from the Central Bank. 

But DCU finance lecturer Tony Foley said: “This is one of those grey areas where everybody turns a blind eye. IBRC does not take in deposits and it does not give out loans so solvency requirements do not really matter in this case. This is not a bank, it is a resolution corporation.” 

IBRC is responsible for running down the operations of Anglo Irish Bank and Irish Nationwide Building Society.