Irish bank shares, which are a significant part of the Irish equity market, did not remain unaffected by these events, although another factor was the rebalancing of growth away from the construction sector in the domestic economy. These recent developments, however, have to be placed in the context of previous substantial increases in Irish bank shares.
Since the non-deposit taking financial institutions were growing rapidly in view of regulatory arbitrage and the liability side dynamics was closely linked to the public funding markets, the systemically important non-bank financial institutions were brought within the regulatory framework. This included capital adequacy and exposure norms. Banks exposures to these entities are also subject to prudential regulation.