Credit Institution Prudential Supervision

Historically the Central Bank of Ireland has had overall responsibility for the authorisation and supervision of credit institutions operating in Ireland. From 4 November 2014 this changed with a number of supervisory responsibilities and decision making powers moving to the European Central Bank (ECB) through the establishment of the Single Supervisory Mechanism (SSM). 

The ECB is responsible for all core supervisory responsibilities as defined in the Council Regulation (EU) No. 1024/2013 (SSMR). For Significant Institutions, a Joint Supervisory Team (JST), led by the ECB and consisting of both ECB and Central Bank supervisors directly supervise these firms. The Central Bank remains responsible for the supervision of activities of institutions defined as Less Significant.  

The objectives in supervising Credit Institutions are: 

  • to foster a stable banking system; 
  • to provide a degree of protection to depositors with individual credit institutions 

As set out in the Central Bank Act 1942 (as amended) the Central Bank shall perform its functions and exercise its powers in a way that is consistent with:  

  • the orderly and proper functioning of financial markets, 
  • the prudential supervision of providers of financial services, and  
  • the public interest and the interest of consumers.   

The Central Bank operates a direct prudential supervision approach, as well as a risk based approach to supervision. In 2011 the Central Bank introduced the Probability Risk and Impact System (PRISM) framework for the supervision of regulated firms, used to provide a structured framework for credit institution supervision The Central Bank now uses the ECB IMAS supervision system which enhances the Central Bank’s ability to deliver judgment-based, outcome-focused regulation. It provides a tool for supervisors to continually challenge themselves and their firms in order to safeguard financial stability and to protect consumers.  

Further information about the SSM can be found in the ECB Guide to Supervision and the ECB website . Further information about PRISM can be found on our PRISM page