Written Answers - Banking Sector Regulation

Tuesday, 3 May 2011

Dáil Éireann Debate
Vol. 731 No. 1

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  156.  Deputy Richard Boyd Barrett  Information on Richard Boyd Barrett  Zoom on Richard Boyd Barrett   asked the Minister for Finance  Information on Michael Noonan  Zoom on Michael Noonan   the process under which the Central Bank contracted the Boston Consulting Group, Barclay’s Capital and BlackRock Solutions to conduct the stress tests on the Irish banking system; if he will address, in particular, the reasons BlackRock Solutions was hired; the amount it was paid and the tendering process it undertook. [6900/11]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan  Zoom on Michael Noonan  The Central Bank of Ireland is not Exchequer funded. This matter is the responsibility of the Central Bank Commission. The Minister for Finance had no role in the matter. The Central Bank has informed me that in light of the requirement under the EU-IMF programme to use consultants under a very tight deadline for urgent financial stability purposes, it was not possible to apply normal tender processes. However, expert firms were selected from a larger list. The Central Bank invited those firms to tender and those able to provide submissions at short notice were reviewed. A selection panel, including a Central Bank appointed risk adviser, was used to assess presentations from firms. Firms were also asked to provide fee estimation and were then selected. Firms were chosen on the basis of their expertise and knowledge, with each having a specific role in specified areas.

BlackRock is a leading global provider of investment and risk advisory services to public and private clients. It was commissioned to leverage its extensive expertise to provide a bottom-up loan loss forecast for the Irish banks in both a base case and a stress scenario over the next three years and lifetime. Barclays Capital provided expert advice on banking sector reorganisation and deleveraging issues. The Boston Consulting Group provided project management resources across the Financial Measures Programme, assessed the loan loss forecasting exercise and contributed to expert advice for the PCAR and PLAR. The Central Bank has informed me that final cost is expected to be in the region of €30 million, including VAT. It is important to note that these costs relate to the three firms and third party subcontractors. The costs also cover additional work that is being carried out during the second quarter of 2011 in relation to the assessment of INBS loan losses and review of Anglo loan loss methodologies. Details of all firms, including third party subcontractors are available in the Central Bank’s Financial Measures Programme Report, which is available at www.financialregulator.ie/industry-sectors/credit-institutions/Documents/The%20Financial%20Measures%20Programme%20Report.pdf.


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