Financial Measures Programme FAQs 

 The purpose of this page is to answer frequently asked questions from the public in relation to the Financial Measures Programme

Q1. What is the Central Bank doing?

The Central Bank has again reviewed the level of capital reserves set aside by Irish banks.   Capital acts as a cushion against losses. The results of this exercise have determined that banks should hold higher levels of capital reserves into the future.  These higher requirements should ensure that banks emerge from the current difficulties in a stronger position.   The new capital reserves are designed to cover expected losses for the next three years.  

Q2. What is Capital?

In banking, capital comprises mainly share capital, capital contributions, reserves, and certain types of debt and financial instruments. Capital acts as a cushion against losses, it can be seen as a measure of financial health.  Capital is depleted when banks experience losses.

Q3.  Why do the banks need higher capital reserves?

The banks need higher capital reserves to cover future loan losses and to restore confidence in the Irish banking system internationally.

Q4.  How much capital will the banks need?

Collectively the four banks will be required to raise €24bn in capital in order to remain above a minimum capital target of 10.5% Core Tier 1 in the base scenario and 6% Core Tier 1 in the stress scenario, plus allowing for an additional protective buffer. Each bank must meet a liquidity requirement of a target loan to deposit target ratio of 122.5% by 2013, through a combination of run-off and disposals of non-core assets.  Please see the press release for individual bank figures.

Q5.  How did the Central Bank arrive at these figures/new capital requirements?

Please see the press release and report on the Financial Measures Programme that are published on our website.  The report includes stress tests based on adverse macro economic scenarios to establish the capital needs of banks over the next three years. 

Q6. Where is the funding coming from?   How will the Irish banks meet this new capital requirement?

As part of the EU/IMF rescue package, €35 billion has been set aside for capitalisation of Irish banks.

Q7.  What does this mean for my bank?

Recapitalising the banks will mean that they are in a stronger position to meet expected loan losses.

Q8. What does it mean for me?

This development will make no difference to how you interact with your bank and you can expect your business to be handled as normal.   Branches will continue to open as normal and the staff there will continue to assist you with your banking requirements.

Deposits will continue to be covered by the Deposit Guarantee Scheme and the Eligible Liabilities Guarantee Scheme 2010.

Q9. Is my money safe?

Yes.  The Deposit Guarantee Schemes currently in place for depositors are as follows:

A.    Existing deposits are protected under the Deposit Guarantee Scheme up to a limit of €100,000 per person per institution. See www.nca.ie for a list of participating banks.

B.     The Deposit Guarantee Scheme is supplemented by the government guarantee scheme which guarantees the balance of deposits in excess of €100,000.   See www.nca.ie for a list of participating banks in each scheme

C.     If you have a term deposit (up-to 5 years) that was made after your institution joined the Eligible Liabilities Guarantee Scheme then you are protected to maturity.   Check with your bank.

Q10.  I am a UK resident.  Are my savings protected? (applies to any non-resident)

The current Deposit Guarantee Scheme (limit €100,000) and the Eligible Liabilities Guarantee Scheme(over €100,000) covers all deposits with Irish banks.  Go to www.nca.ie for more info and check with your bank.

Q11.  Does my day-to-day banking service change e.g., do I continue to earn interest on my deposits, make my rescheduled repayments, continue discussions about rescheduling loans etc?

This development will make no difference to how you interact with your bank and you can expect your business to be handled as normal.   Branches will continue to open as normal and the staff there will continue to assist you with your banking requirements.    

 

 

 

 

 

 


  • Available in this section: