IRELAND Law and Practice Contributed by: Keith Robinson, Barry Tyrrell and Julia Mullin, Dillon Eustace LLP
EU member states were required to transpose the changes to the BRRD by 13 November 2024 and apply those changes from 14 Novem - ber 2024. The changes to the Single Resolution Mechanism (SRM) Regulation (806/2014) (the “SRM Regulation”) will be directly effective while the changes giving resolution authorities the power to set internal MREL on a consolidated basis applied from 13 May 2024, and the chang - es in respect of Liquidation Entities applied from 14 November 2024. Liquidity The liquidity cover ratio (the “LCR”) introduced by the Basel Committee on Banking Supervi - sion requires banks to maintain sufficient unen - cumbered high-quality liquid assets (“HQLA”) against net cash outflows over a 30-day period. The purpose of the ratio is to ensure that a bank has sufficient capital to meet any short-term liquidity disruptions that may affect a particu - lar market. HQLA are only assets that can be converted easily and quickly into cash, such as cash, treasury bonds or corporate debt. There are three categories of HQLA. They are as follows. • Level 1 assets which are not subject to a discount while calculating the LCR. • Level 2A assets which are subject to a dis - count of 15%. • Level 2B assets which are subject to a dis - count of 50%. No more than 40% of HQLA can comprise of Level 2 assets with Level 2B assets comprising no more than 15% of all total stock of HQLA. Irish banks are also subject to a longer term stable funding requirement introduced as a ratio of an institution’s available stable funding
to its required stable funding over a one-year period (the “NSFR”). The NSFR obliges banks to hold sufficient stable funding to meet its funding needs over a 12-month period, both in normal and stressed conditions. Basel III requires the NSFR to be no lower than 100% on an ongoing basis. 8. Insolvency, Recovery and Resolution 8.1 Legal and Regulatory Framework The domestic legislation in respect of the insol - vency, recovery and resolution of Irish banks largely developed as a result of the impact of the 2008 financial crisis. Under Part 7 of the Cen - tral Bank and Credit Institutions (Resolution) Act 2011 (the “2011 Act”), the CBI can apply to the High Court for an order to liquidate a bank in any of the following circumstances: • if the CBI believes that the liquidation would be in the public interest; • the bank is unable to meet its obligations to its creditors; • the bank has failed to comply with a direction of the CBI; • the bank’s licence or authorisation has been revoked; or • the CBI considers that it is in the interest of deposit holders that it be wound up. No person can apply to have a bank wound up without giving the CBI prior notice and receiving approval from the CBI. Only a liquidator approved by the CBI can wind up a bank. As soon as prac - ticable after the court makes a winding-up order, the CBI will appoint a liquidation committee to oversee the winding-up process. Subject to the 2011 Act, the normal provisions of Irish company law apply to liquidations of banks.
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