improvement in enforcement powers. overall the imf ascribed to the central bank as of 2013 a satisfactory level of compliance with the aforementioned basel core principles for effective banking supervision. taken together, these two reviews gave me sufficient assurance that irish banks and irish banking supervision, albeit not without need for further progress, had been put on a more solid footing, and that i could direct our 2014 efforts to moving towards the entry into force of the single supervisory mechanism ( ssm ). this entailed two major lines of work. the first line of work was internal and organisational ; i will describe its outcome later. the second line of work was the comprehensive assessment. under the leadership of the ecb, we conducted, like the other national supervisory authorities, an asset quality review and a stress test of the top 120 eurozone banking groups. the results were published in the comprehensive assessment report of the ecb in october 2014. the ecb found that around one out of five eurozone banking groups was in need of recapitalisation. out of the four top bis central bankers ’ speeches irish banks, only permanent tsb was found to need supplementary capital to fully withstand an adverse stress test. ptsb subsequently raised the required capital in may of this year. let me now change tack and describe the overhaul of the banking regulatory framework. domestically, between 2010 and 2013, the oireachtas and the central bank introduced several pieces of legislation, codes and regulations which much strengthened the requirements weighing in on commercial banks and the hand of the central bank in supervising them and enforcing against their breaches. these new requirements were additional to the prevailing european capital requirement directive. internationally, between 2010 and 2013, three large initiatives unfolded that are directly relevant to matters of the inquiry. first, in 2010, the eu adopted the european system of financial supervision, comprising the european systemic risk board ( esrb ) and the three european supervisory authorities including the european banking authority ( eba ). the esrb is tasked with macro prudential oversight in europe, while the eba is in charge of banking supervisory convergence and drafting secondary legislation. also in 2010, the basel committee on banking supervision addressed the inadequacies of its second agreement and replaced it by the third agreement ( basel iii ), this third agreement forms the basis of the new prudential banking regulatory framework in europe, adopted under the irish presidency of the eu council, and enshrined in the fourth capital requirements directive ( crd iv ) and the

to create a predictable framework for resolving banks that fail in the future. the brrd provides a toolkit for resolving banks, such as the bailing in of unsecured liabilities in lieu of the bailing out of the banks by taxpayers. the central bank has been designated as the national resolution authority and is already working with the banks to develop resolution plans in line with the brrd requirements. for larger eurozone banks, including our own, resolution decisions will be made from january next year by the single resolution board in brussels. it will avail of the new prefunded resolution funds in the eurozone, which are to be gradually mutualised. let me now turn to the transformation of the supervision of eurozone banks from 2014. as i mentioned earlier, in 2012, eu heads of states and governments agreed to transfer the responsibility for supervising banks to the european level with the establishment of the ssm. eurozone banks have come under the supervision of the ecb since november 4, 2014. the ecb directly supervises the largest european banks, including bank of ireland, aib, permanent tsb and ulster bank, with our assistance and that of other national supervisors. we supervise the smaller banks under the oversight of the ecb. the revamped banking supervisory framework put in place at the central bank by matthew elderfield has mostly been superseded by the ssm. our domestic supervisory engagement cycle, approval procedures, and internal supervisory guidance, enshrined in prism, were effective from 2011 to october 2014 ; they have now been replaced by the prescriptions of the ssm supervisory manual, which are guided by a similar, if not more, tough, intrusive and sceptical ethos. daily supervision of the larger banks is conducted by joint supervisory teams, mostly made of central bank staff, but always headed by an ecb coordinator based in frankfurt. these coordinators propose draft decisions drawn in consultation with us to the supervisory board of the ecb, where i sit. when approved, these draft decisions are submitted to the governing council and finally signed by the president of the ecb. in the central bank, banking supervision was reorganised and further strengthened in the course of 2014. approved headcount in banking supervision was brought up to 140, and actual headcount has increased to 124. we have thus reduced, albeit partially, the numerical gap with eurozone standards. instead of two generalist divisions, we now have three : one is dedicated to ongoing