IRELAND Law and Practice Contributed by: Keith Robinson, Barry Tyrrell and Julia Mullin, Dillon Eustace LLP
7. Prudential Regime 7.1 Capital, Liquidity and Related Risk
defined under CRR and other regulated entities are not covered by the DGS. Securities issued by a bank are not subject to the DGS. Part 6 of the DGS Regulations consider the financing of the DGS and sets out that the scheme is financed by the participating banks in the state by way of a deposit guarantee con - tributory fund (the “Fund”). The CBI is required to ensure that it has adequate systems in place to determine the potential liabilities of the Fund and it must ensure, as the national competent authority, that the Fund is used in accordance with the DGS Regulations. Section 19(2) of the DGS Regulations requires the CBI to ensure that the Fund holds at least 0.8% of the amount of eligible deposits of all banks authorised in the state as of 3 July 2024. Each bank is required to contribute to the DGS in an amount calculated by reference to the num - ber of covered deposits that the bank holds rela - tive to the aggregate covered deposits held by all banks in the state. Between 2008 and 2010, the Irish state took sig - nificant ownership interests in Allied Irish Bank (AIB), Bank of Ireland and Permanent TSB. IBRC was nationalised and is now being wound up and the state has fully divested its sharehold- ing in Bank of Ireland. The state’s current inter - ests per its most recent government publication are as follows: AIB (56%) and Permanent TSB (57%).
Control Requirements Irish Capital Requirements
Under the Irish Capital Regulations, a bank must have initial capital of at least EUR5 million and must be in a position to meet ongoing capital requirements. Regulatory Capital The capital requirements applicable to Irish banks while currently primarily derived from CRD IV and CRR, are also informed by inter - national standards promulgated by the Basel Committee on Banking Supervision as well as pronouncements and decisions made by the Basel Committee on Banking Supervision, the Financial Stability Board and the OECD. All of these provisions inform the approach the CBI takes to setting capital adequacy and liquidity requirements. Irish banks are obliged to maintain financial resources equal to or greater than a percentage of their risk weighted assets (“RWA”). The own funds of an institution must at all times be in excess of the initial capital amount (cur - rently EUR5 million) required at the time of its authorisation. Own funds’ requirements need to be determined in line with the credit risk, market risk, operational risk and settlement risk. Irish banks are subject to the following capital requirements. • The Pillar One requirement mandates a regu - latory minimum amount of capital banks must hold. This is a total capital ratio of 8% of the RWA. A minimum of 4.5% of RWA must be CET 1 and at least 6% of RWA should be met
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