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Irish government steps in to prop up all its struggling banks
By Daily Mail Reporter
Last updated at 10:00 AM on 30th September 2008
Taoiseach Brian Cowen has moved to safeguard the financial system
The Irish government today rushed to prop up the country's banking system with an unlimited, comprehensive guarantee of all forms of deposits and loans to them for the next two years.
The government, led by Taoiseach Brian Cowen (right), said the move was needed 'to safeguard the Irish financial system'.
The department of finance said the guarantee was designed to 'remedy a serious disturbance in the economy caused by the recent turmoil in the international financial markets'.
The guarantee covers Allied Irish Bank, Bank of Ireland, Anglo Irish Bank, Irish Life & Permanent, Irish Nationwide building society and Educational building society.
Only two weeks ago the government raised the deposit protection guarantee for savers with Irish banks to €100,000 (£80,000) from its previous €20,000.
But yesterday saw a massive slide in share prices of all the major Irish financial groups with Anglo Irish down 45 per cent and Irish Life & Permanent down 34 per cent.
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Today's move came on the advice of the governor of the central bank and the country's head of financial regulation.
The new guarantee covers all money borrowed by Irish banks from other financial institutions and includes retail, commercial, institutional and interbank deposits, bonds, senior debt and dated subordinate debt.
The guarantee came in at midnight and runs until 28 September, 2010.
The department of finance said: 'The decision has been taken by government to remove any uncertainty on the part of counterparties and customers of the six credit institutions.
'The government's objective in taking this decisive action is to maintain financial stability for the benefit of depositors and businesses and is in the best interests of the Irish economy.'
But the government made it clear that it is only standing behind the banks in return for their co-operation. 'The guarantee is being provided at a charge to the institutions concerned and will be subject to specific terms and conditions so that the taxpayers' interest can be protected,' a spokesman said.
It was not immediately clear what price the banks will pay for the unlimited guarantees.
Ireland was the economy which led European growth but last week became the first Eurozone country to declare it is in recession.
By Daily Mail Reporter
Last updated at 10:00 AM on 30th September 2008
Taoiseach Brian Cowen has moved to safeguard the financial systemThe Irish government today rushed to prop up the country's banking system with an unlimited, comprehensive guarantee of all forms of deposits and loans to them for the next two years.
The government, led by Taoiseach Brian Cowen (right), said the move was needed 'to safeguard the Irish financial system'.
The department of finance said the guarantee was designed to 'remedy a serious disturbance in the economy caused by the recent turmoil in the international financial markets'.
The guarantee covers Allied Irish Bank, Bank of Ireland, Anglo Irish Bank, Irish Life & Permanent, Irish Nationwide building society and Educational building society.
Only two weeks ago the government raised the deposit protection guarantee for savers with Irish banks to €100,000 (£80,000) from its previous €20,000.
But yesterday saw a massive slide in share prices of all the major Irish financial groups with Anglo Irish down 45 per cent and Irish Life & Permanent down 34 per cent.
More...
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Today's move came on the advice of the governor of the central bank and the country's head of financial regulation.
The new guarantee covers all money borrowed by Irish banks from other financial institutions and includes retail, commercial, institutional and interbank deposits, bonds, senior debt and dated subordinate debt.
The guarantee came in at midnight and runs until 28 September, 2010.
The department of finance said: 'The decision has been taken by government to remove any uncertainty on the part of counterparties and customers of the six credit institutions.
'The government's objective in taking this decisive action is to maintain financial stability for the benefit of depositors and businesses and is in the best interests of the Irish economy.'
But the government made it clear that it is only standing behind the banks in return for their co-operation. 'The guarantee is being provided at a charge to the institutions concerned and will be subject to specific terms and conditions so that the taxpayers' interest can be protected,' a spokesman said.
It was not immediately clear what price the banks will pay for the unlimited guarantees.
Ireland was the economy which led European growth but last week became the first Eurozone country to declare it is in recession.
