The European Central Bank warned Ireland that proposed legislation revamping the country's financial system could threaten some of the ECB's operations, and pressed Irish officials for assurances that the central bank's collateral rights will be protected, the Wall Street Journal reported today. "The ECB has serious concerns that the draft law is insufficiently legally certain on a number of critical issues" including rules on collateral posted by banks seeking emergency loans from the ECB, the central bank said in an opinion paper posted on its website.

Even as Europe’s leaders were praising the Irish government’s deficit-cutting efforts, the country received a dramatically different verdict Friday from a credit rating agency: a steep downgrade and a warning of more to come, the International Herald Tribune reported. Having pledged late Thursday to do “whatever is required” to contain the debt crisis and defend their embattled currency, European Union leaders reconvened for the final day of a summit meeting.

A seven-judge Supreme Court has begun hearing the appeal by property investor Paddy McKillen aimed at preventing the proposed transfer to the National Assets Management Agency (Nama) of some €2.1 billion in loans made to himself and his companies, the Irish Times reported. The proposed acquisition would be “a commercial disaster” for Mr McKillen and was based on a total denial of his constitutional right to fair procedures, Michael Cush, for Mr McKillen, argued yesterday.

Ireland's parliament late Wednesday passed legislation to instruct financial institutions to sell assets and to impose losses on banks' subordinated creditors, as part of a plan to restructure the country's banking system agreed with the European Union and International Monetary Fund, Dow Jones reported. The Credit Institutions (Stabilisation) Bill passed the final stage of voting in the lower house of parliament, or Dail, by a majority of 78 votes to 71. The ruling Fianna Fail-led coalition passed the bill with the help of Green Party and Independent lawmakers.

Minister for Finance Brian Lenihan said it would have been "galling" to have paid €40 million in bonuses to AIB staff at a time when the Government was asking everyone in the country to make sacrifices, the Irish Times reported. Mr Lenihan said this morning he had written to AIB yesterday informing it that further investment by the taxpayer was conditional on the non-payment of any bonuses, no matter when they may have been earned. He said using taxpayers' funding to pay the bonuses was "unacceptable".

Property developer John Fleming has filed for bankruptcy to a British court, which will allow him to emerge from the process after a year, compared with up to 12 years under the Irish system, the Irish Times reported. The Cork developer, whose construction and investment firms owe €1 billion to their banks, is the first of Ireland’s major developers to make such a move. A receiver is now in control of Mr Fleming’s finances, following a declaration of bankruptcy in an Essex court. The petition gives the address of Mr Fleming and his wife as Billericay in Essex, England.

New rules regarding the subordinated debt of Irish banks, including Bank of Ireland and AIB, and a proposal to transfer the deposits of Irish Nationwide Building Society to Anglo Irish Bank, are expected to be introduced tomorrow as part of the Credit Institutions (Stabilisation) Bill 2010, the Irish Times reported.

Irish lawmakers are expected to pass a parliamentary vote on accepting a €67.5 billion ($89.2 billion) aid package from the European Union and International Monetary Fund Wednesday, The Wall Street Journal reported. The ruling coalition, led by Prime Minister Brian Cowen's Fianna Fail party, is expected to win the vote with the support of lawmakers unaffiliated to any political party. The government has already passed parts of its 2011 budget with the help of independent lawmakers' support.

Ireland's lawmakers narrowly voted Thursday to cut welfare benefits and debated a raft of other cost-slashing measures, but their efforts to combat Europe's worst deficit didn't stop the Fitch agency from slashing the nation's credit rating, the Associated Press reported. A legislative bill to cut payments to the unemployed, single parents, children, the blind and disabled passed on an 80-75 vote that reflected Prime Minister Brian Cowen's slim majority in parliament.

The deadline for second-round bids for Quinn Insurance passed yesterday as the likelihood of a sale to a trade buyer grows amid uncertainty over the future of State-owned Anglo Irish Bank, the Irish Times reported. The bank has submitted a joint bid with US insurance giant Liberty Mutual, which has also submitted an offer to take over the general insurance part of the firm. Anglo has shelved plans for a solo offer due to considerable regulatory hurdles facing the proposal as the cost of the bank has soared to as much as €34 billion.