Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision 2011/77/EU on granting Union financial assistance to Ireland
Date: 2011-11-11
Institutions: European Commission
Subjects: Ireland, economic stabilisation, financial aid, financial intervention, reflation, stability programme

EUROPEAN COMMISSION 

Brussels, 11.11.2011 
COM(2011) 745 final 

2011/0335 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

amending Implementing Decision 2011/77/EU on granting Union financial assistance to 
Ireland 

 
 
  
 
EXPLANATORY MEMORANDUM 

Upon a request by Ireland, the Council granted financial assistance to Ireland on 7 December 
2010  (Council  Implementing  Decision  2011/77/EU)  in  support  of  a  strong  economic  and 
financial  reform  programme  aiming  at  restoring  confidence,  enabling  the  return  of  the 
economy to sustainable growth, and safeguarding financial stability in Ireland, the euro area 
and the EU. 

In line with Article 3(9) of Decision 2011/77/EU, the Commission, together with the IMF and 
in liaison with the ECB, has conducted the fourth review of the Irish authorities' progress on 
the implementation of the agreed measures as well as of the effectiveness and economic and 
social impact of the agreed measures.  

Taking  into  account  the  revised  economic  outlook,  as  well  as  intervened  information,  the 
Commission proposes to modify the economic policy conditions underpinning the assistance 
as  explained  below.  The  Commission  views  the  proposed  changes  to  the  economic  policy 
conditions  as  necessary  to  ensure  the  smooth  implementation  of  the  programme  and  secure 
the programme's objectives. 

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2011/0335 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

amending Implementing Decision 2011/77/EU on granting Union financial assistance to 
Ireland 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union,  

Having  regard  to  Council  Regulation  (EU)  No  407/2010  of  11  May  2010  establishing  a 
European financial stabilisation mechanism1, and in particular Article 3(2) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

Upon a request by Ireland, the Council granted financial assistance to it (Implementing 
Decision  2011/77/EU2)  in  support  of  a  strong  economic  and  financial  reform 
programme  aiming  at  restoring  confidence,  enabling  the  return  of  the  economy  to 
sustainable  growth,  and  safeguarding  financial  stability  in  Ireland,  the  euro  area  and 
the Union. 

In  line  with  Article  3(9)  of  Implementing  Decision  2011/77/EU,  the  Commission, 
together  with  the  IMF  and  in  liaison  with  the  European  Central  Bank  (ECB),  has 
conducted the fourth review of the Irish authorities' progress on the implementation of 
the agreed measures as well as of the effectiveness and economic and social impact of 
the agreed measures. 

Bank of Ireland's remaining outstanding capital requirement has decreased from EUR 
500  million  to  EUR  350  million  due  to  further  liability  management  exercises  and 
gains  from  closing  out  of  hedging  contracts  attached  to  the  subordinated  debt 
instruments. 

The  Irish  authorities  have  requested  moving  until  the  end  of  the  second  quarter  of 
2012 the deadline to prepare the legislation to strengthen the regulatory framework for 
the  credit  unions  sector  to  enable  thorough  consultation  of  stakeholders.  In  the 
meantime  the  authorities  will  address  the  weaknesses  in  the  most  troubled  credit 
unions while protecting deposits to ensure financial stability. 

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2 

OJ L 118, 12.5.2010, p. 1. 
OJ L 30, 4.2.2011, p. 34. 

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(5) 

(6) 

The Irish authorities have requested moving until the end of the first quarter of 2012 
the deadline to prepare the envisaged fiscal responsibility legislation, which will give 
enactment  to  the  recent  enhancements  of  the  Stability  and  Growth  Pact,  to  enable 
thorough discussion with stakeholders. 

light  of 

In 
2011/77/EU should be amended. 

these  developments  and  considerations,  Implementing  Decision 

HAS ADOPTED THIS DECISION:  

Article 1 

Article 3 of Implementing Decision 2011/77/EU is amended as follows: 

(1) in paragraph 7, point (g) is replaced by the following: 

"(g)  the  recapitalisation  of  the  domestic  banks  by  end  July  2011  (subject  to 
appropriate adjustment for expected asset sales and liability management exercises in 
the cases of Irish Life & Permanent and Bank of Ireland) in line with the findings of 
the  2011  Prudential  Liquidity  Assessment  Review  (PLAR)  and  Prudential  Capital 
Assessment  Review  (PCAR),  as  announced  by  the  Central  Bank  of  Ireland  on  31 
March  2011.  To  allow  further  burden  sharing,  the  final  EUR  0,35  billion  step  in 
recapitalising  Bank  of  Ireland  shall  be  completed  by  end  2011  and  any  further 
recapitalisation of Irish Life & Permanent shall be completed following the disposal 
of the insurance arm.” 

(2) in paragraph 7, points (e) and (p) are deleted. 

(3) in paragraph 8, the following points are added: 

"(d) the submission of legislation to the Oireachtas to assist the credit unions with a 
strengthened  regulatory  framework  including  more  effective  governance  and 
regulatory requirements. 

(e)  the  adoption  of  measures  reinforcing  a  credible  budgetary  strategy  and 
strengthening the budgetary framework. Ireland shall adopt and implement the fiscal 
rule that any additional unplanned revenues in 2011-2015 will be allocated to deficit 
and  debt  reduction.  Ireland  shall  introduce  a  Fiscal  Responsibility  Bill  including 
provisions  for  a  medium-term  budgetary  framework  with  binding  multi-annual 
ceilings  on  expenditure  in  each  area,  fiscal  rules  and  assure  the  Fiscal  Advisory 
Council’s  independence.  This  shall  be  made  taking  into  account  the  revised 
economic governance reforms at Union level and build on reforms already in place.” 

This Decision is addressed to Ireland.  

Article 2 

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Article 3 

This Decision shall be published in the Official Journal of the European Union.  

Done at Brussels,  

For the Council 
The President 

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