State seeks to extend bank guarantee scheme
THE Government will seek Dail and European approval to extend its comprehensive bank guarantee scheme for another year.
The scheme will be tweaked to allow companies to deposit money without a guarantee if they want to take the risk.
Finance Minister Michael Noonan plans to present legislation to the Dail before Christmas to extend the existing protection for deposits held in Allied Irish, Bank of Ireland, Anglo Irish, Irish Nationwide, the EBS and Irish Life & Permanent.
"The continuation of the scheme is an important support to the Irish Banking system and complements the steps that have already been taken to help restore it to a sound footing," the Department of Finance said.
The European Central Bank has approved the extension in principle, it added. The scheme will cover liabilities of just over €100bn compared to €150bn guaranteed last year before a prolonged run on the banks.
The guarantee, which is subject to European Commission review and approval every six months, was set to run out on December 31 this year. It has now been extended to next June.
The Credit Institutions (Eligible Liabilities Guarantee) Scheme, or ELG, was first adopted in 2009 as a more limited replacement for the sweeping guarantee of bank liabilities given by the Government in September 2008 to insure €440bn of deposits and holdings following the collapse of Lehman Brothers.
The ELG covers the majority of significant retail and corporate deposits and some individual holdings up to €1m.
Other savings and deposits up to €100,000 are covered indefinitely under a different guarantee.