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Ireland includes UK banks in its £315bn deposit guarantee
02.10.08
The Irish government today changed the law to allow the offshoots of UK banks Royal Bank of Scotland and HBOS in Ireland into its €400 billion (£315.5 billion) deposit-guarantee scheme.
The scheme, which guarantees 100% of savings and deposits held in six Irish banks and building societies, was signed into law by President Mary McAleese today.
But it is receiving growing criticism from European politicians, who say Ireland has acted unilaterally.
Finance Minister Brian Lenihan said during the late-night debate on the bill that the scheme may no longer be limited just to the six Irish institutions.
This followed two calls from UK Chancellor Alastair Darling yesterday and intense lobbying in Dublin and Brussels from other banks which have sizeable branch networks in Ireland.
The largest is Ulster Bank, a subsidiary of NatWest owner Royal Bank of Scotland. It has 132 branches in Ireland and is said to account for 20% of retail savings there.
National Irish Bank, owned by Danske Bank, has 59 branches in Ireland. Halifax Ireland was set up two years ago as a rebranding of Bank of Scotland's 25 branches in the Republic of Ireland.
A spokeswoman for RBS said: "We will be admitted into the scheme as soon as practicable."
The bill was altered this morning to allow other banks to be included by a simple ministerial order. HBOS and RBS had asked to be included in the guarantee.
It was not immediately clear if HBOS had been invited to join the guarantee scheme.
Mark Duffy, head of HBOS operations in Ireland, said: "It is important that there continues to be a level playing field so that customers enjoy equal choice from all Irish banks."
Financial advisers have reported a surge in interest from UK savers in the past two days, wanting to know if they should shift deposits to Irish banks.
But their enthusiasm has been tempered by a revelation that the Irish government's move was prompted by the potential collapse of at least one, if not two, Irish banks.
Reader views (2)
What does the behemoth EU care about Ireland or any small country. We are still a sovereign state and ultimately responsible for our own wellbeing. If you were to wait for the EU wheels to grind out a coordinated response to anything, the polar ice-cap would have shrunk to the size of a pea. Sufficient to inform partners out of courtesy. Did UK seek to coordinate Northern Rock (where I had significant savings through their Irish branch) rescue with Irish Central Bank, or Germany or Belgium or Luxembourg? No. You do what you have to do, for, in the end you stand alone.
- Barry Moynihan, Dublin, Ireland
Quite extraodinary - Darling, interventionist extraordinaire lecturing others for doing similar. Also, the joke that is the EU getting worked up about state aid/subsidy. What the dickens do they think the Common Agricultural Policy is??!
- Siegfried, Munich
