Credit Institutions (Eligible Liabilities Guarantee) Scheme, 2009

JurisdictionIreland
CitationIR SI 490/2009

S.I. No. 490 of 2009

CREDIT INSTITUTIONS (ELIGIBLE LIABILITIES GUARANTEE) SCHEME 2009

Notice of the making of this Statutory Instrument was published in

“Iris Oifigiúil” of 11th December, 2009.

I, BRIAN LENIHAN, Minister for Finance, in exercise of the powers conferred on me by section 6(4) of the Credit Institutions (Financial Support) Act 2008 (No.18 of 2008), hereby make the following scheme with respect to which, pursuant to section 6(5) of that Act, a draft has been laid before each House of the Oireachtas and a resolution approving of the draft has been passed by each such House:

Citation

1. This Scheme may be cited as the Credit Institutions (Eligible Liabilities Guarantee) Scheme 2009.

Scheme

2. This Scheme constitutes a scheme for the purposes of section 6(4) of the Credit Institutions (Financial Support) Act 2008 (No. 18 of 2008). The terms of this Scheme are as set out in articles 3 and 4 and the Schedule.

Definitions

3. In this Scheme,

3.1“Act” means the Credit Institutions (Financial Support) Act 2008 (No. 18 of 2008) (as amended);

3.2“CIFS Scheme” means the Credit Institutions (Financial Support) Scheme 2008 ( S.I. No. 411 of 2008 );

3.3“commencement date” means the date specified by the Minister as being the commencement date of the issuance period;

3.4“covered institution” has the meaning set out in the CIFS Scheme;

3.5“covered liabilities” has the meaning set out in the CIFS Scheme;

3.6“eligibility criteria” means the criteria set out in paragraph 12 of the Schedule;

3.7“eligible liability” shall be construed in accordance with paragraph 11 of the Schedule;

3.8“eligible liability guarantee” means the guarantee by the Minister in respect of guaranteed liabilities as provided for under paragraph 8 of the Schedule;

3.9“eligible liability guarantee certificate” means a certificate issued to a participating institution pursuant to the rules confirming that an eligible liability (other than a deposit) is a guaranteed liability or that all eligible liabilities issued pursuant to a guaranteed programme are guaranteed liabilities;

3.10“eligible liabilities guarantee scheme agreement” means an agreement entered into by a participating institution with the Minister, pursuant to which, inter alia, the participating institution agrees to be bound by the terms and conditions of this Scheme, including the rules;

3.11“guaranteed liability” means:

(a) an eligible liability in the form of a deposit (to the extent not covered by deposit protection schemes in the State (other than the CIFS Scheme) or any other jurisdiction and subject as provided for in paragraph 13 of the Schedule); and

(b) any other eligible liability in respect of which the scheme operator has issued an eligible liability guarantee certificate or which is issued under a guaranteed programme.

3.12“guaranteed programme” means a programme for the issuance of eligible liabilities in respect of which the scheme operator has issued an eligible liability guarantee certificate;

3.13“issuance period” means the period described in paragraph 12.1(b) of the Schedule;

3.14“participating institution” means a credit institution or a subsidiary of a credit institution which has satisfied the criteria provided for in paragraph 3 of the Schedule;

3.15“participating institution certificate” means a certificate issued to an institution pursuant to the rules confirming that it is a participating institution;

3.16“programme” means any arrangement under which a participating institution issues or is capable of issuing more than one instrument (whether in physical, book entry, dematerialised or other form);

3.17“rules” means the Rules of the Credit Institutions (Eligible Liabilities Guarantee) Scheme 2009 (as amended from time to time);

3.18“Scheme” means this Credit Institutions (Eligible Liabilities Guarantee) Scheme 2009; and

3.19“scheme operator” means the National Treasury Management Agency.

CIFS Scheme

4. The CIFS Scheme shall be updated and amended pursuant to paragraphs 30, 31, 32 and 33 of the Schedule. Save as a result of those paragraphs, the scope, duration and terms of the CIFS Scheme shall be unchanged by this Scheme. All covered liabilities guaranteed under the CIFS Scheme as at the commencement date of this Scheme (and in respect of a participating institution, from the time when such participating institution becomes a participating institution under this Scheme) shall remain unconditionally and irrevocably guaranteed under and in accordance with the terms of the CIFS Scheme until 29 September 2010 or until their maturity date, whichever date is sooner.

Schedule Terms of this Scheme

Scope

1. The Minister makes this Scheme in the public interest because the Minister is of the opinion that:

1.1there is a serious threat to the stability of credit institutions in the State generally, or there would be such a threat if he or she did not provide the financial support;

1.2the provision of the financial support to a specific institution faced with financial difficulties is necessary, in the public interest, for maintaining the stability of the financial system in the State; and

1.3the provision of the financial support is necessary to remedy a serious disturbance in the economy of the State.

This Scheme may apply to any participating institution where it is necessary to further the financial stability objectives in section 2(1) of the Act and in particular the maintenance of the systemic stability of the banking sector in the State.

2. The Minister makes this Scheme having regard to the following objectives in particular:

2.1maintaining financial stability in the best interests of the public and the economy of the State;

2.2providing participating institutions with access to a stable funding stream and longer term funding from the capital markets to ensure that they can discharge their central role in facilitating economic activity and lending to the real economy in the State;

2.3ensuring compliance with the requirements of EU State aid and competition law; and

2.4minimising the potential cost to the Exchequer and taxpayers.

3. A participating institution shall be a systemically important and solvent credit institution or a subsidiary of such a credit institution (including any Irish subsidiary of a credit institution authorised in another Member State) which the Minister specifies or has already specified by order under section 6(1) of the Act in the exercise of his or her powers under that Act as requiring financial support and fulfilling the objectives of the Act and which:

3.1has applied to join this Scheme:

(a) within sixty (60) calendar days of the commencement date, if it is a covered institution; or

(b) at any time prior to or during the issuance period, if it is not a covered institution;

3.2has executed an eligible liabilities guarantee scheme agreement pursuant to which, inter alia, the participating institution agrees to be bound by the terms and conditions of this Scheme, including the rules; and

3.3has received a participating institution certificate in accordance with the rules.

4. Each eligible liabilities guarantee scheme agreement shall contain, inter alia, a counter indemnity pursuant to which the participating institution shall agree to reimburse the Minister for any payments made by the Minister under the eligible liability guarantee in respect of the guaranteed liabilities of that particular participating institution. The Minister may also require that a parent undertaking or any other undertaking within the participating institution’s group execute such an eligible...

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