THE controversial bank guarantee scheme is expected to be extended for another six months, the Irish Independent has learned.
The latest extension of the four-year-old scheme means it will remain in place until the end of June 2013, covering next year's bank "stress tests".
The decision comes despite the fact that senior officials have examined proposals not to renew the scheme when it is due to expire at the end of December.
In recent weeks Wilbur Ross, the billionaire US investor who is a shareholder and director of Bank of Ireland, publicly lobbied for an end to the scheme.
However, the Irish Independent understands that a decision has been taken to renew the so-called eligible liabilities guarantee (ELG) scheme.
Finance Minister Michael Noonan was expected to announced the latest extension in the Seanad today.
Under the scheme, the Government guarantees customer deposits of over €100,000 that are placed with the Irish-covered banks.
The scheme also covers debts of the banks unless, like the latest bond deals of Bank of Ireland and AIB, they are explicitly excluded
It was originally introduced to prevent a banking collapse in 2008 when €440bn was covered. This year €90bn was guaranteed.
The ELG must be extended every six months, or it lapses. Even if it lapses, smaller customer deposits of less than €100,000 held in a bank would be protected. The insurance bill for the scheme is €1bn and has been blamed for preventing banks returning to profit.
AIB paid out €465m last year to take part in the scheme. Bank of Ireland paid almost €450m.
Mr Noonan had consider letting the scheme lapse at the end of 2011 but eventually decided to extend it.