Government Decision to Safeguard Irish Banking System
The Department of Finance has drafted the conditions of the scheme. Details are available from Department of Finance on their website.
The following information is taken from Government statements:
30 September 2008
The Government has decided to put in place with immediate effect a guarantee arrangement to safeguard all deposits (retail, commercial, institutional and interbank), covered bonds, senior debt and dated subordinated debt (lower tier II), with the following banks:
Allied Irish Bank, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent, Irish Nationwide Building Society and the Educational Building Society and such specific subsidiaries as may be approved by Government following consultation with the Central Bank and the Financial Regulator.
It has done so following advice from the Governor of the Central Bank and the Financial Regulator about the impact of the recent international market turmoil on the Irish Banking system. 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. The guarantee will cover all existing aforementioned facilities with these institutions and any new such facilities issued from midnight on 29 September 2008, and will expire at midnight on 28 September 2010.
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.
The Financial Regulator has advised that all the financial institutions in Ireland will continue to be subject to normal ongoing regulatory requirements.
This very important initiative by the Government is designed to safeguard the Irish financial system and to remedy a serious disturbance in the economy caused by the recent turmoil in the international financial markets.
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9 October 2008
The Minister for Finance, Mr Brian Lenihan, TD, confirmed today (October, 9th) the Government’s intention that the Guarantee scheme for banks announced last week would be available to certain banking subsidiaries in Ireland with a significant and broadbased footprint in the domestic economy. The Minister said that it is intended that Ulster Bank, First Active, Halifax Bank of Scotland, IIB Bank and Postbank would be eligible for the scheme.
The Minister added that the scheme was in the advanced stages of drafting and would be presented to Dáil Éireann as quickly as possible. The Minister said, “clearly, there will be some additional limitations and safeguards in relation to these operations to ensure that the support provided relates to liabilities arising from their position within the national economy, rather than to their wider group”.
The Minister took the opportunity to welcome the announcement yesterday of significant interventions in the UK banking market by the UK Government. The Minister said that this broadranging package was another indication of the determination of European Governments, signalled at Tuesday’s ECOFIN meeting, to provide support to systemically relevant financial institutions. The Minister noted that EU Member States indicated their determination to take all necessary measures to enhance the soundness and stability of our banking system and to protect the deposits of individual savers.
The Minister said that Ireland would continue to be vigilant to protect the security and stability of its financial system and is convinced of the determination of our partners to do the same.
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The existing deposit protection arrangements remain in place for institutions not covered by the Government guarantee. Read more about the Deposit Protection Scheme. You can also get a list of the levels of protection with various institutions.