THE decision to end the controversial bank guarantee has been welcomed by all three of the remaining lenders covered by the scheme.
Management at Bank of Ireland, AIB and Permanent TSB all backed yesterday evening's announcement by Finance Minister Michael Noonan that he plans to end the guarantee from March 28. The decision to scrap the scheme in the early part of 2013 was well flagged last year and came as no surprise on the markets.
It will mean a financial boost for all three banks, and comes just ahead of the publication of financial results for 2012 by all three next month.
Last year the three banks between them paid €1.1bn to the Exchequer for the protection offered under the guarantee scheme
Those fees have been a drain on profitability for the banks, already struggling with historic losses and a depressed economy.
It will now drop to €430m this year, and as the guaranteed share of each bank's debt falls, that bill should gradually reduce to nothing.
Bank of Ireland has lobbied hard to have the scheme closed. Its chief executive Richie Boucher as well as Wilbur Ross, an influential shareholder and director, have both made public calls for the Eligible Liabilities Guarantee (ELG) to go.
AIB and Bank of Ireland both borrowed on the markets without using the guarantee at the end of last year, in a sign of their determination to move free of the costly protection scheme.
Yesterday Mr Noonan said ending the guarantee was one of a series of steps in his banking policy, which were all linked.
Part of that policy was making banks more financially viable, including by freeing them from the bank guarantee fees, he stated.
Reducing banks' costs would mean they could lend to customers, including home buyers and small and medium sized businesses (SME), he said.
Shutting down the former Anglo Irish Bank and Irish Nationwide earlier this month was part of the same strategy, he said.
That decision reduced the drag of the former banks on the economy and helped cut the cost of borrowing for Ireland, he said.