The Hindu Business Line : Crisis deepens in Europe, Irish govt guarantees bank deposits

LONDON: With the credit crisis spreading further in Europe, the Ireland administration on Tuesday announced a guarantee with immediate effect to safeguard deposits of country's banks in a bid to cushion its banking system from the financial turmoil.

“This very important initiative by the Government is designed to safeguard the Irish financial system and to remedy a serious disturbance in the economy caused by the recent turmoil in the international financial markets,'' an Ireland government statemen t said.

“The guarantee is being provided at a charge to the institutions concerned and will be subject to specific terms and conditions so that the taxpayers interest can be protected,'' it added. According to the statement, the guarantee would safeguard all de posits (retail, commercial, institutional and interbank), covered bonds, senior debt and dated subordinated debt (lower tier II).

The guarantee arrangement has been reached with Allied Irish Bank, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent, Irish Nationwide Building Society and the Educational Building Society and such specific subsidiaries as may be approved by th e following consultation with the Central Bank and the Financial Regulator.

In the last two to three days, Europe has seen bailouts of major financial institutions in the region, including Fortis and the latest one to join the list is Belgian bank Dexia, which has been extended a lifeline of 6.4 billion euro. Other troubled Eur opean entities are Germany's Hypo Real Estate, Iceland's Glitnir Bank and British lender Bradford & Bingle, among others. – PTI

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