Introduction to Credit Institution Prudential Supervision 

Historically the Central Bank of Ireland (“the Central Bank”) has had overall responsibility for the authorisation and supervision of credit institutions operating in Ireland. From 4 November 2014 this has changed with a number of supervisory responsibilities and decision making powers moving to the European Central Bank (ECB) through the establishment of the Single Supervisory Mechanism (SSM). `

The ECB is responsible for all core supervisory responsibilities as defined in the Council Regulation (EU) No. 1024/2013 (SSMR). For Significant Institutions, consisting of the larger institutions operating within Ireland, a Joint Supervisory Team (JST), led by the ECB and consisting of both ECB and Central Bank supervisors will directly supervise these firms. A full list of significant institutions is available on the ECB website.  

The ECB is responsible for the granting of banking licences, with the exception of credit institutions seeking authorisation under section 9A of the Central Bank Act 1971 (as amended).  

The Central Bank remains responsible for the supervision of activities defined in the SSMR as non-core.  

Those institutions defined as Less Significant will continue to be directly supervised by Central Bank supervision teams. A list of these institutions can be found here.  

In addition, the Central Bank remains responsible for oversight of liquidity, conduct of business and anti-money laundering for branches of non-Irish EEA licensed banks operating in Ireland.  

Further information about the SSM can be found in the ECB Guide to Supervision and the ECB website.  

The objectives in supervising Credit Institutions are:

  • to foster a stable banking system;
  • to provide a degree of protection to depositors with individual credit institutions

As set out in the Central Bank Act 1942 (as amended) the Bank shall perform its functions and exercise its powers in a way that is consistent with- 

  • the orderly and proper functioning of financial markets,
  • the prudential supervision of providers of financial services, and 
  • the public interest and the interest of consumers.  

In relation to the direct prudential supervision of providers of financial services, the Central Bank operates a risk based approach to supervision. In 2011 the Central Bank introduced a new framework for the supervision of regulated firms called Probability Risk and Impact System (PRISM) to provide a structured framework for credit institution supervision (mores details on PRISM can be found on our PRISM page).  PRISM enhances the Central Bank’s ability to deliver judgment-based, outcome-focused regulation.  It provides a tool for supervisors to continually challenge themselves and their firms in order to safeguard financial stability and to protect consumers.