Opinion of the European Central Bank of 7 November 2011 on the extension of the Irish State guarantee of eligible liabilities of credit institutions (CON/2011/88)
Date: 2011-11-07
Institutions: European Central Bank
Subjects: Ireland, State aid, credit institution, financial stability, guarantee, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 7 November 2011 

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

(CON/2011/88) 

Introduction and legal basis 

On  7  October  2011,  the  European  Central  Bank  (ECB)  received  a  request  from  the  Irish  Minister  for 

Finance  for  an  opinion  on  a  draft  Credit  Institutions  (Eligible  Liabilities  Guarantee)  (Amendment) 

Scheme  2011  (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 revised draft scheme 

1.1  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 

Opinions  CON/2009/92,  CON/2010/71  and  CON/2010/75  on  proposed  amendments  to  the  ELG 

Scheme. 

1.2  The Irish Government now proposes a further prolongation of the validity of the ELG Scheme by 

12 months, i.e. that eligible liabilities may be issued until 31 December 2012. 

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. 

 
 
 
 
 
                                                 
ECB-PUBLIC 

2. 

The appropriate time to consult the ECB 

The ECB notes that the Minister has requested the ECB to provide its opinion as soon as possible in order 

to ensure that Union State aid approval for the draft scheme can be obtained quickly and the draft scheme 
presented for parliamentary approval. The ECB reiterates its position as expressed in previous opinions3 

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.  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. 

The draft scheme 

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

from 31 December 2011 to 31 December 2012. The Minister in his request for an opinion advises 

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 as regards such state aid.   

3.2  The ECB reiterates the views expressed in its previous opinions on the subject of the ELG Scheme 
and  the  Irish  legislation  on  financial  support  to  credit  institutions4.  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  field5.  The  ECB  also  notes  that  it  is  the  European 

Commission’s  practice  to  approve  Member  States’  guarantee  schemes  for  no  longer  than  six 
months in advance6. 

3.3  Taking  into  account  financial  stability  considerations,  a  further  extension  of  the  ELG  Scheme 

would  be  beneficial.  Moreover,  the  ECB  understands  that  the  extension  of  the  ELG  Scheme  is 

safeguarded by the timely compliance of the Irish government with the ongoing European Union 

and International Monetary Fund (IMF) Programme for financial assistance to Ireland. 

3  
4 
5  
6  

See Opinion CON 2010/75, CON/2010/71, paragraph 2, CON/2010/50, paragraph 2 and CON/2010/36, paragraph 2.1. 
See Opinions CON/2010/75, CON/2010/71, CON/2010/29 and CON/2008/44. 
See Opinions CON/2009/24, paragraph 3.1, CON/2009/54, paragraph 2.5.2 and CON/2009/73, paragraph 3.2. 
See the Directorate General Competition staff working document of 30 April 2010, ‘The application of State aid rules to 
government  guarantee  schemes  covering  bank  debt  to  be  issued  after  30  June  2011’,  available  on  the  European 
Commission’s website at www.ec.europa.eu.  

2 

 
 
                                                 
ECB-PUBLIC 

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

Done at Frankfurt am Main, 7 November 2011. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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