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Irish government guarantees banks Irish government guarantees banks
(9 minutes later)
The Irish government has acted to shore up its financial system.The Irish government has acted to shore up its financial system.
It is guaranteeing all deposits in Irish banks and all money borrowed by the banks from other financial institutions.It is guaranteeing all deposits in Irish banks and all money borrowed by the banks from other financial institutions.
On Tuesday, the Department of Finance said the state would safeguard all deposits, bonds and debts in six banks and building societies for two years.On Tuesday, the Department of Finance said the state would safeguard all deposits, bonds and debts in six banks and building societies for two years.
The decision follows Monday's enormous slide in the value of the shares of Irish banks.The decision follows Monday's enormous slide in the value of the shares of Irish banks.
The banks covered are Allied Irish, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent, Irish Nationwide Building Society and the Educational Building Society.The banks covered are Allied Irish, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent, Irish Nationwide Building Society and the Educational Building Society.
The government will also cover specific subsidiaries that may be approved by the government following consultation with the Central Bank and the Financial Regulator.
The Irish Department of Finance said all deposits, bonds and debts in the six banks and building societies would be covered by the state for the next two years.The Irish Department of Finance said all deposits, bonds and debts in the six banks and building societies would be covered by the state for the next two years.
But there will be terms and conditions.But there will be terms and conditions.
See Robert Preston's blogSee Robert Preston's blog
That means that the Irish government has decided that the Irish taxpayer will now provide a guarantee for up to 400bn euro of liabilities.That means that the Irish government has decided that the Irish taxpayer will now provide a guarantee for up to 400bn euro of liabilities.
The department said that the scheme would cover all UK branches of the financial institutions, but that negotiations were under way with the British authorities on safeguards that might be provided to any of the six banks' subsidiary companies in the UK.The department said that the scheme would cover all UK branches of the financial institutions, but that negotiations were under way with the British authorities on safeguards that might be provided to any of the six banks' subsidiary companies in the UK.
The Irish stock exchange reacted favourably to the move with banks shares rising dramatically after big falls on Monday.The Irish stock exchange reacted favourably to the move with banks shares rising dramatically after big falls on Monday.
Finance minister Brian Lenihan said: "If funds are not secured by the Irish banks, it will be a very, very serious matter for the economic life of this community. On Tuesday, Finance minister Brian Lenihan said: "If funds are not secured by the Irish banks, it will be a very, very serious matter for the economic life of this community.
"Every bank, every worker, everyone knows how short those funds have been in the last year."Every bank, every worker, everyone knows how short those funds have been in the last year.
"If they dry up entirely, then that is very serious for Ireland. We must take action to secure the stability of our banking system and that is what the government decided to do.""If they dry up entirely, then that is very serious for Ireland. We must take action to secure the stability of our banking system and that is what the government decided to do."
The Irish government hopes the move will remove any uncertainty that surrounds Irish banks.The Irish government hopes the move will remove any uncertainty that surrounds Irish banks.