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Prudential Requirements for Banks in Ireland

Banks operating in Ireland must comply with a set of prudential requirements to ensure their stability and resilience. Here are some key details about these requirements.

Capital Requirements

Initial Capital Requirement

• Banks must have an initial capital of at least EUR 5 million.
• They must be able to meet ongoing risk-based capital requirements.

Additional Capital Buffers

• The Central Bank has set additional capital buffers for the six significant Irish banks:
  • AIB Group plc
  • Bank of Ireland Group plc
  • Citibank Europe plc
  • Bank of America Europe DAC
  • Barclays Bank Ireland plc
  • Permanent TSB Group Holdings plc
• CRD IV allows the Central Bank to require other systemically important institutions (O-SIIs) to maintain a buffer requirement of up to 2% of risk-weighted assets.

Countercyclical Capital Buffer (CCyB)

Purpose and Rate

• The CCyB aims to promote a sustainable provision of credit to the economy by making the banking system more resilient and less pro-cyclical.
• The current CCyB rate is 0%, reduced from 1% in 2020 to support credit supply to the Irish economy.

Liquidity Requirements

Short-Term Resilience

• Liquidity Coverage Ratio (LCR): introduced by the Basel Committee on Banking Supervision (BCBS) to promote the short-term resilience of the liquidity risk profile of banks.
• Net Stable Funding Ratio (NSFR): a quantitative liquidity requirement that aims to ensure that banks maintain an adequate stock of unencumbered high-quality liquid assets.

Capital Requirements Regulations

Direct Effect in Ireland

• The CRR has direct effect in Ireland and was transposed into Irish law by:
  • European Union (Capital Requirements) Regulations 2014
  • European Union (Capital Requirements) (No. 2) Regulations 2014
  • European Union (Capital Requirements) (Amendment) Regulations 2020