Business Irish

Thursday 19 September 2019

State guarantee to banks second highest in EU at €723bn

Sarah Collins in Brussels

IRISH banks have been state-guaranteed to the tune of €723bn since the start of the crisis, the second-highest figure in the 27-member bloc.

The European Commission's state aid scoreboard, which ranks countries in order of their reliance on government support, places Ireland second only to Britain, which has gained EU approval for over €850bn worth of guarantees, capital injections and other support schemes.

The Irish figure includes the €400bn blanket guarantee issued in September 2008, which is no longer in place.

The Department of Finance says that at the end of September 2010 the state was on the hook for €146.7bn in guarantees.

The state has received over €1.33bn in fees under the guarantee schemes.

More than €45bn has already been injected or pledged to the banks through the issue of promissory notes, which will be paid starting from 2011.

This includes €29.3bn for Anglo Irish Bank; €5.4bn for Irish Nationwide Building Society; €7.9bn for AIB; €3.5bn for Bank of Ireland and €350m for the Educational Building Society.

Finance Minister Brian Lenihan announced on 28 November that an extra €10bn would be provided in immediate injections to the banking sector as part of an €85bn EU-IMF rescue plan. The Irish Independent understands this is to be divided between Bank of Ireland, AIB, EBS and Irish Life & Permanent.

EU competition chief Joaquín Almunia said yesterday that he was working "in good cooperation" with the Irish authorities to determine the future shape of the banking sector.

"After the adoption last Sunday of the Irish programme we -- the Commission, European Central Bank and International Monetary Fund -- are now working together with the Irish authorities for the implementation of this programme as soon as possible."

However, he would not be drawn on the future of Anglo Irish Bank, which is to be wound down over time and customer deposits transferred to another institution in the State.

In total, since the start of the crisis, European banks have been backed by €4.5 trillion worth of public money -- the equivalent of 40pc of the bloc's total annual output.

However, €3.4 trillion of the total is made up of guarantees, most of which may never need to be used.

Irish Independent

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