Bank guarantee scheme wins EU extension
Published 10/11/2010 | 12:42
The Government today secured European approval to extend its bank guarantee scheme.
Finance Minister Brian Lenihan said the move will give continued protection to €153bn worth of deposits.
"Today's announcement is a most welcome development and will underpin the Government's efforts to restore the financial system and support the funding position of the participating institutions in the guarantee scheme," the minister said.
"The Government is determined to rebuild consumer and investor confidence in our financial system which has an important role to play in ensuring businesses, and notably SMEs (Small and Medium-sized Enterprises), can invest for growth.
"The approach has now received the endorsement of both the European Commission and the ECB (European Central Bank)."
The guarantee, which is subject to Commission review and approval every six months, was set to run out on December 31 this year. It has now been extended to June 30 next year.
In a statement, the European Commission said the Irish scheme was in line with its guidance on support for banks during the financial crisis.
"The extended measures are well targeted, proportionate and limited in time and scope," the statement said.
"The Commission, therefore, concluded that the guarantees are an adequate means to remedy a serious disturbance in the Irish economy."
The Credit Institutions (Eligible Liabilities Guarantee) Scheme, or ELG, was adopted at the end of last year.
It replaced an original blanket guarantee scheme from September 2008 which finance officials had estimated would insure €440bn of deposits and holdings.
The ELG covers the vast majority of significant retail and corporate deposits and some individual holdings around the million euro mark.
Other savings and deposits up to €100,000 are covered indefinitely.
The Department of Finance said that the value of liabilities in the banks has been reduced through the work of state-run "bad bank" NAMA. It estimates the value of the ELG at €153bn.