Opinion of the European Central Bank of 16 September 2010 on the extension of the Irish State guarantee of certain liabilities of credit institutions (CON/2010/71)
Date: 2010-09-16
Institutions: European Central Bank
Subjects: Ireland, State aid, financial stability, guarantee, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 16 September 2010 

on the extension of the Irish State guarantee of certain liabilities of credit institutions 

(CON/2010/71) 

Introduction and legal basis 

On 10 September 2010 the European Central Bank (ECB) received a request from the Irish Minister for 

Finance  (hereinafter  the  ‘Minister’)  for  an  opinion  on  a  draft  Credit  Institutions  (Eligible  Liabilities 

Guarantee) (Amendment) Scheme 2010 (hereinafter the ‘draft scheme’) amending the Credit Institutions 

(Eligible Liabilities Guarantee) Scheme 2009 (hereinafter the ‘ELG Scheme’).  

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning of the European Union and the sixth indent of Article 2(1) of Council Decision 98/415/EC of 

29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national  authorities  regarding  draft 
legislative  provisions1,  as  the  draft  scheme  relates  to  rules  applicable  to  financial  institutions  insofar  as 

they  materially  influence  the  stability  of  financial  institutions  and  markets.  In  accordance  with  the  first 

sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council 

has adopted this opinion. 

1.  

Purpose of the draft scheme 

The ELG Scheme was signed into law on 9 December 2009. The ECB was consulted on the ELG Scheme 
at  the  draft  stage  and  adopted  its  Opinion  CON/2009/562.  Subsequently  the  ECB  adopted  its  Opinion 

CON/2009/92 on proposed amendments to the ELG Scheme. 

The Irish Government now proposes a prolongation of the validity of the ELG Scheme by three months, 

i.e.  that  eligible  liabilities  may  be  issued  until  31  December  2010  together  with  some  minor  technical 

changes. 

2. 

The appropriate time to consult the ECB 

2.1  The  ECB  notes  that  the  Minister  has  requested  that  the  ECB  provides  its  opinion  as  soon  as 

possible  in  order  to  ensure  that  Union  State  aid  approval  for  the  draft  scheme  can  be  obtained 

1  
2  

OJ L 189, 3.7.1998, p. 42.  
All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 

 
 
 
 
 
                                                 
quickly  and  the  draft  scheme  presented  for  parliamentary  approval.  The  ECB  points  out  that,  in 

cases  of  particular  urgency  which  do  not  allow  for  a  normal  consultation  period,  the  consulting 

authority may indicate the urgency in the consultation request and ask for a shorter deadline for the 

ECB’s  opinion  to  be  adopted.  This  does  not  prejudice  the  consulting  authority’s  duty  under 

Articles 127(4) and 282(5) of the Treaty to consult the ECB on national draft legislative provisions 

falling within its fields of competence in due course of the national legislative process. The second 

sentence  of  Article  4  of  Decision  98/415/EC  provides  that  the  ECB  must  be  consulted  ‘at  an 

appropriate stage’ in the legislative process. This implies that the consultation should take place at 

a  point  in  the  legislative  process  which  affords  the  ECB  sufficient  time  to  examine  the  draft 

legislative  provisions  and  to  adopt  its  opinion  in  all  required  language  versions,  and  which  also 

enables  the  relevant  national  authorities  to  take  the  ECB’s  opinion  into  consideration  before  the 

provisions are adopted. Article 3(4) of Decision 98/415/EC also obliges Member States to suspend 

the adoption process for draft legislative provisions, pending receipt of the ECB’s opinion.  

2.2  The ECB would appreciate the Department of Finance giving due consideration to honouring their 

obligation to consult the ECB in the future, in accordance with Decision 98/415/EC. 

3. 

General observations 

3.1  The  purpose  of  the  draft  scheme  is  the  extension  of  the  issuance  period  under  the  ELG  Scheme 

from 29 September 2010 to 31 December 2010. The Minister in his request for an opinion advises 

that 

increased  pricing  will  apply 

to 

liabilities 

issued  under 

the  draft  scheme  after 

29 September 2010,  the  precise  quantum  of  which  is  to  be  determined  in  conjunction  with  the 

European  Commission.  The  ECB  notes  that  it  has  not  been  requested  to  consider  the  pricing 

modalities for the purposes of this Opinion. The Minister also states that a positive assessment by 

the  ECB  on  financial  stability  grounds  of  the  requirement  for  a  prolongation  of  the  guarantee  of 

short  term  and  interbank  liabilities  is  considered  essential  by  the  European  Commission  to  the 

Commission’s approval process.  

3.2  The  ECB  reiterates  the  views  expressed  in  previous  opinions3.  In  particular,  it  recalls  that 

coordination  of  the  duration  of  national  financial  support  schemes  across  the  Union  is  of  crucial 
importance in order to ensure a level playing field4.  

3.3  Taking  into  account  financial  stability  considerations, an  extension  of  the  ELG  Scheme  may  be 

beneficial. 

3 
4 

See Opinions CON/2008/44 and CON/2010/29. 
See Opinions CON/2009/24, paragraph 3.1, CON/2009/54, paragraph 2.5.2 and CON/2009/73, paragraph 3.2. 

2 

 
 
 
 
                                                 
This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 16 September 2010. 

[signed] 

The Vice-President of the ECB 

Vítor CONSTÂNCIO 

3