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Bank bailout cost drops by
 almost €25bn

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Michael McGrath

Michael McGrath

Michael McGrath

BANKING bailout costs have plummeted by close to €25bn, the Herald can reveal.

The bill of rescuing the banks has been slashed from €64bn to €40bn.

The reduction came about as a result of Government actions taken since 2008, when the banking collapse occurred.

The controversial decision to issue a blanket bank guarantee and the cost to the country is now the focus of the pending Oireachtas Banking Inquiry.

Struggle

The Government was forced to seek aid from the EU, European Central Bank and the International Monetary Fund in 2010 as it struggled to prop up the banks.

Newly-released figures show that the bailed-out banks have so far paid €4.3bn in fees to the State in return for the benefit of the guarantee.

This is made up of €3.5bn
in fees paid by the banks
for cover under the Eligible
Liability Guarantee (ELG) which is to remain in place until 2018.

The banks covered by the guarantee are AIB (€1.23bn), Bank of Ireland (€1.25bn), Irish Life and Permanent (€556m), EBS (€205m) and the IBRC (€259m).

On top of the €3.5bn, another €758m was paid by the banks to the State under the initial guarantee between 2008 and 2011.

Guarantee

On the night of September 29, 2008, the Fianna Fail/Green Party coalition government introduced a blanket guarantee, which meant that the liabilities, including deposits, of the banks were guaranteed by the Minister for Finance, who at the 
time was the late Brian Lenihan.

When added to the €6bn received by the State from the sale of bank assets and the €13.1bn valuation of the State's current holdings in the banks, the net cost of the bailout is now €40.6bn.

Fianna Fail's finance spokesman Michael McGrath said: "It is only right and proper that banks were charged for the original bank guarantee".

hnews@herald.ie


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