Dáil Éireann Debate, Tuesday - 9 December 2025
301. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance the number of supervisory inspections carried out by the Financial Regulator on each Irish retail and commercial bank in every year from 2004 to 2008, including the number of onsite inspections, thematic inspections and governance reviews conducted during that period, in tabular form. [69662/25]
View answer302. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance to provide a breakdown of all enforcement actions initiated by the Financial Regulator or its predecessor authorities against Irish retail and commercial banks between 2004 and 2008, including the statutory basis for each action; the nature of the breaches identified and the outcome of each case. [69663/25]
View answer303. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance if his Department holds any internal assessments, briefing papers, risk analyses or correspondence created between 2004 and 2008 concerning the adequacy of banking supervision at that time; and the main findings of any such documents. [69664/25]
View answer304. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance whether he has reviewed the recent remarks of a person (details supplied) in which they acknowledged that the Central Bank had been too trusting of the banking sector during their tenure; and his Department's current assessment of the accuracy and implications of those remarks. [69665/25]
View answer305. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance the specific supervisory and risk-assessment methodologies used by the Financial Regulator between 2004 and 2008 when assessing capital adequacy, liquidity risk and property-related credit exposures in Irish banks; and the way in which those methodologies have been replaced or reformed since 2009. [69666/25]
View answer306. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance to provide details of any formal concerns, warnings or risk escalations communicated to his Department by the Financial Regulator between 2004 and 2008 regarding overheating in the property market, rapid credit expansion or emerging solvency risks within the banking system. [69667/25]
View answer307. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance the statutory or governance oversight his Department exercised over the Financial Regulator between 2004 and 2008; and the mechanisms in place at that time for monitoring the effectiveness of banking supervision. [69668/25]
View answer308. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance the specific regulatory weaknesses identified in the Honohan Report, the Nyberg Report and the Banking Inquiry which have since been addressed through primary legislation and the weaknesses which remain under review. [69669/25]
View answer309. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance whether his Department has carried out any retrospective review of supervisory failures in the banking system between 2004 and 2008; and to provide the conclusions of any such review, including recommendations for further reform. [69670/25]
View answer310. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance to publish a consolidated historical record of supervisory, enforcement and governance actions taken by the Financial Regulator between 2004 and 2008 in order to provide full transparency on regulatory failures that contributed to the financial crisis; and the timeline for publication. [69671/25]
View answer312. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance the specific supervisory or enforcement failures identified within the Central Bank or its predecessor authorities for the period 2004 to 2008, that contributed to the weaknesses later examined in post-crisis reports, including any internal Departmental assessments or reviews that refer to excessive reliance on principles-based supervision, insufficient quantitative risk analysis, or gaps in the regulatory framework; and if he will make a statement on the matter. [69692/25]
View answer313. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance if he accepts the assessment by a person (details supplied) that the Central Bank had been “too trusting” of Irish banks during the pre-crisis period; the Department’s interpretation of this assessment; and the extent to which this institutional culture contributed to supervisory weaknesses identified by subsequent inquiries. [69693/25]
View answer314. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance his Department’s current estimate of the total fiscal cost to the State arising from regulatory and supervisory failures during the period 2004 to 2008, including the bank guarantee, recapitalisations, NAMA transfers, and related interventions; and the way in which these lessons have been incorporated into current Departmental oversight of the regulatory framework. [69694/25]
View answer315. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance if his Department has evaluated whether any elements of the pre-crisis supervisory culture or regulatory approach identified in post-crisis reports persist within the current regulatory environment; the findings of any such evaluation; and the steps being taken to ensure these risks are addressed through Departmental oversight of the financial regulatory framework. [69695/25]
View answerI propose to take Questions Nos. 301, 302, 303, 304, 305, 306, 307, 308, 309, 310, 312, 313, 314 and 315 together.
The experience of the financial crisis raised significant concerns regarding the regulatory approach that existed in Ireland for the period 2004-2008. Former Central Bank Governor Patrick Honohan was referring to this in his ‘too trusting’ remark that the Deputy has referenced in his parliamentary questions.
The Central Bank during that time adopted a principles based approach to supervision. This approach to supervision placed an emphasis on regulated firms abiding by good governance and on the responsibilities of the boards of such firms to have and maintain in place appropriate governance as well as controls and risk management measures in order to appropriately manage their institutions.
This approach was not without rules. The cornerstone of banking regulation at that time were the capital adequacy directive, later the capital requirements directive, the Central Bank Acts and the Building Societies Act. A key supporting document at that time was the Licensing and Supervision Requirements and Standards for Credit Institutions (dating from 1995), with a non-statutory and non-enforceable basis. It was supplemented by additional requirements relating to, for example, managing liquidity and credit, and the Consumer Protection Code.
The then Government was determined to uncover the cause of the banking crisis in Ireland. A key mechanism to achieving this was the establishment of a formal inquiry into the banking crisis which built on a number of previous reports.
The Banking Inquiry was able to build on the information provided in the Honohan report, the Regling and Watson report and the Nyberg report. The witnesses that were called and the documents provided were able to provide a complete picture of the events leading to the financial crisis.
The Banking Inquiry provided an expansive review of the crisis, drawing on significant amounts of documents and evidence from senior officials across Government, the Central Bank, and the banking sector. The documents utilised in preparing this comprehensive main report of the Banking Inquiry can be found at the following Oireachtas link, https://inquiries.oireachtas.ie/banking/hearings-evidence/.
It comprises several elements; witness statements, hearing transcripts and core books of documents from institutions or participants collated by Participant, Theme and Line of Inquiry. Relevant material held by the Department of Finance from that period was considered by the Banking Inquiry.
The Banking Inquiry provides as much information publicly available as possible in respect of the actions taken in respect of the supervision of financial institutions in the period referred to by the Deputy.
These reports outlined the many failures relevant to the impact of the financial crisis in Ireland. The Honohan report specifically (authored by the former Governor) presented five root causes specific to the collapse of the Irish banking system:
• A comprehensive failure of bank management to maintain safe and sound banking practices;
• A regulatory approach which was too deferential and accommodating, insufficiently challenging and not persistent enough;
• An under-resourced approach to bank supervision that, by relying on governance and risk management procedures, neglected quantitative assessment and the need to ensure there was sufficient capital to absorb the growing property-related risks; and
• An unwillingness to take on board sufficiently the real risk of a looming problem and act with sufficient decisiveness and force to head it off in time; and
• Macroeconomic and budgetary policies that contributed to the economic overheating, and which relied to an unsustainable extent on the construction sector and other transient sources for Government revenue;
Financial regulation has transformed significantly since then. This is because of changes introduced through domestic legislation / reform and also in light of the changing nature of the European architecture of financial regulation.
The Central Bank of Ireland has undergone significant organisational change in terms of structure, culture and resources 2004 to 2008 period and the financial crisis.
The former Central Bank of Ireland and the Irish Financial Services Regulatory Authority were re-amalgamated into one body, the Central Bank of Ireland (the Central Bank). The approach to banking supervision has radically changed to one that is more assertive, risk-based, and challenging, and one which is underpinned by new legislation, predominantly the Central Bank Reform Act 2010 and the Central Bank Supervision and Enforcement Act 2013.
The 2010 Act also increased the transparency and accountability of the Central Bank. For example, the Central Bank will soon publish its annual performance statement, which will be laid before the Houses of the Oireachtas. The Act includes a requirement for the Governor and the Deputy Governors to appear before an Oireachtas Committees if requested and to provide information regarding the annual regulatory performance statement.
The Central Bank and Credit Institutions (Resolution) Act 2011 provides the necessary mechanisms to enable the Central Bank to intervene where a credit institution gets into serious difficulty and is in danger of becoming destabilised or otherwise failing.
The Central Bank (Supervision and Enforcement) Act 2013 further strengthens the ability of the Central Bank to impose and supervise compliance with regulatory requirements and to undertake timely regulatory interventions.
The Government further strengthened the Central Banks powers in 2023 with the enactment of the Central Bank (Individual Accountability Framework (IAF)) Act 2023, which aims to improve governance and culture in the financial services sector by increasing the accountability of individuals, particularly senior executives.
It was developed in response to the retail banking tracker mortgage issue and has the following four main components: (1) the Senior Executive Accountability Regime (SEAR), which clarifies responsibilities for senior roles; (2) the Conduct Standards, which set expected behaviours for all staff; (3) enhancements to the Fitness & Probity (F&P) regime, requiring firms to certify staff competence; and (4) strengthened ASP that allow for direct action against individuals for misconduct. The IAF supports the delivery of the Central Bank’s mandate of safeguarding financial stability and working to ensure that the financial system operates in the best interests of consumers and the wider economy.
A comprehensive review of the Consumer Protection Code was carried out to ensure it remains fit for purpose and continues to protect consumers of financial products today and in the future. The revised Code (published in March 2025 and will take effect from 24 March 2026) delivers an updated and modernised Code that reflects developments of recent years and the services and delivery channels being accessed today.
Since November 2014, the Single Supervisory Mechanism (SSM) has placed significant institutions in participating countries under the direct supervision of the European Central Bank (ECB). The new European Supervisory Authorities, namely the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA) commenced operation in January 2011. At the same time, the European Systemic Risk Board (ESRB) was established.
Through the European System of Financial Supervision (ESFS), the above European authorities, together with the national supervisory authorities (including the Central Bank of Ireland), work to ensure harmonised financial supervision within the EU Single Market.
These legislative reforms have been supplemented by a significant increase in regulatory activity by the Central Bank, with a corresponding increase in staff numbers and skill levels.
The Central Bank now has a regulatory strategy of “assertive risk-based supervision underpinned by a credible threat of enforcement.” A credible threat of enforcement means that the Central Bank will pursue evidence of wrongdoing through the deployment of intensive enforcement investigations and inquiries where there is evidence of wrongdoing.
The Central Bank’s post-crisis “credible threat of enforcement” was supported through the enactment of legislation which bolstered the Central Bank’s powers and the establishment of a dedicated Enforcement Directorate. The Central Bank today has a sophisticated range of statutory powers to intervene as part of its regulatory toolkit, ranging from information gathering powers, skilled person reports and directions, up to customer redress and restitution powers and High Court enforcement orders.
The granting of these powers also came with the attendant political and public expectation that the Central Bank would utilise them to address wrongdoing, which it has done to good effect over the last decade. In order to credibly supervise firms, market participants must understand that, once commenced, the Central Bank will see its enforcement processes through to their conclusion.
The Central Bank recently completed two Administrative Sanctions Procedure (ASP) inquiries relating to the financial crisis and the tracker mortgage scandal and have concluded over 160 enforcement outcomes in total across the sanctioning regimes since 2006 to present day.
In the case of the ASP in particular, the Central Bank has, for over a decade, deployed its sanctioning powers to strategically and proportionately promote compliance and to deter misconduct at firm and individual level.
The Financial Stability Group has facilitated and strengthened communication and coordination between the relevant State institutions i.e. the Central Bank, the Department of Finance and the National Treasury Management Agency.
As Minister for Finance, I am satisfied that the national and European reforms implemented since 2010 represent a fundamental transformation of the supervisory system and that weaknesses identified in the reports no longer characterise the modern regulatory environment.
Given the comprehensive coverage of these reports and the inquiry, the significant pool of evidence and testimony composed for the Banking Inquiry (which is still accessible to the public) and the fundamental transformation discussed above, I do not feel it is an appropriate to begin another historical review of this period and that the focus needs to be on the existing system of supervision and enforcement.
As regards the approach to supervision, this was in line with the principles based approach and was primarily desk based for the period you are referring (2004 to 2008). It comprised of desk based reviews of regulatory and financial returns, regulatory approvals such as capital instruments, on-site reviews and inspections.
In May 2005 the Financial Regulator (FR) adopted a formal risk-based framework whereby a single cohesive approach across all sectors of activity was applied. The system evaluated risk using such factors as supervisory complexity, corporate governance, business and reputational risk and so on, based on regular statistical reports provided by credit institutions on their activities and financial condition. The risk-based framework was used to draw up a schedule of on-site inspections focusing on a smaller number of large banks, for example large institutions should be inspected on-site once a year, with a one-every-two-years schedule for the next tier of institutions and the remainder to be inspected on a longer rotation depending on available resources.
I understand that the Banking Inquiry was to the extent possible in receipt of papers from the Department as part of the deliberations of the Inquiry.
In terms of your questions related to costs: the total recapitalisation of the domestic banks amounted to €64.1bn, of which €34.7bn was invested in Anglo Irish Bank and Irish Nationwide Building Society (INBS) which became Irish Bank Resolution Corporation (IBRC). The remaining €29.4bn was invested in Allied Irish Banks (AIB), Bank of Ireland and Permanent TSB (PTSB).
In recent years, the State has recovered the full amount of this investment (c.€29.7 billion) by way of disposals, investment income and liability guarantee fees and retains a further c. 57.4% stake in PTSB (valued at c. €1.0bn). The Board of PTSB is currently undertaking a Formal Sale Process (“FSP”), which presents the State with the opportunity to exit its last remaining shareholding in an Irish bank after 17 years.
The IBRC was placed into special liquidation in February 2013. All admitted unsecured creditors at the date of liquidation (including the State) have been fully repaid. To date, the State has received approx. €1.7 billion from the special liquidation in respect of its unsecured creditor claims, interest on these claims and its holding of the preference shares in the Bank. Any remaining funds left in the liquidation once all remaining tasks are completed will be returned to the State as the owner of the equity in the former bank.
The National Asset Management Agency (NAMA) was established as part of Ireland’s response to the banking and property crisis. It acquired land and development and associated loans from participating institutions. NAMA is on track to substantively conclude its operational wind-down by the end of 2025. NAMA had a balance sheet of €32 billion at acquisition. NAMA has made a contribution of €5.2 billion to the State, comprising cash, corporation tax and assets transferred to the LDA. NAMA’s expected lifetime contribution to the Exchequer is projected to be €5.5 billion.
