Britannia Radio

Irish government guarantees banks

The Irish government has acted to shore up its financial system.

It is guaranteeing all deposits in Irish banks and all money borrowed
by the banks from other financial institutions.

On Tuesday, the Department of Finance said the state would safeguard
all deposits, bonds and debts in six banks and building societies for
two years.

The decision follows Monday's enormous slide in the value of the
shares of Irish banks.

The banks covered are Allied Irish, Bank of Ireland, Anglo Irish Bank,
Irish Life and Permanent, Irish Nationwide Building Society and the
Educational Building Society.

The Irish Department of Finance said all deposits, bonds and debts in
the six banks and building societies would be covered by the state for
the next two years.

But there will be terms and conditions.

That means that the Irish government has decided that the Irish
taxpayer will now provide a guarantee for up to 400bn euro of liabilities.

The department said that the scheme would cover all UK branches of the
financial institutions, but that negotiations were under way with the
British authorities on safeguards that might be provided to any of the
six banks' subsidiary companies in the UK.

The Irish stock exchange reacted favourably to the move with banks
shares rising dramatically after big falls on Monday.

On Tuesday, Finance minister Brian Lenihan said: "If funds are not
secured by the Irish banks, it will be a very, very serious matter for
the economic life of this community.

"Every bank, every worker, everyone knows how short those funds have
been in the last year.

"If they dry up entirely, then that is very serious for Ireland. We
must take action to secure the stability of our banking system and
that is what the government decided to do."

The Irish government hopes the move will remove any uncertainty that
surrounds Irish banks.

Story from BBC NEWS:
http://news. bbc.co.uk/ go/pr/fr/ -/1/hi/northern_ ireland/7643572. stm

Published: 2008/09/30 10:17:49 GMT