Irish Government 100% guarantees bank deposits and debts

by Gill Montia

Story link: Irish Government 100% guarantees bank deposits and debts

The Government of Ireland has announced that it will guarantee the deposits and debts of the country’s banks for the next two years.

The move follows a sharp fall in Irish banking shares yesterday, which formed part of a worldwide response to the uncertainties surrounding the proposed $700 billion (£380 billion) rescue plan for the US financial sector and economy.

The Irish scheme is effective immediately and covers Allied Irish Bank, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent, Irish Nationwide Building Society and the Educational Building Society.

Taxpayers will not be wholly responsible for footing the bill for any failures, as the guarantee will be funded through a levy on the banks.

Earlier this month, the Irish government raised the level at which savings were protected to €100,000, more than double the £35,000 per individual currently granted in the UK.

Government ministers say this latest action has been taken to maintain financial stability and protect the Irish economy, which is the first eurozone economy to have officially entered into a recession, as a result of the credit crisis and a booming property market.

The new regime should give increased protection to savers in UK Post Office accounts, which are backed by the Bank of Ireland.