Rush on Irish Banks As They Guarantee Savings

  • 16 years ago
  • Uncategorized
Reports from the City of London indicate that there has been a rush from investment funds into Irish Banks. This is after the government of Ireland moved to quell a run on banks in the country when it guaranteed retail deposits for the next two years. Finance Minister Brian Lenihan indicated that all savings at Ireland’s six banks would be protected until September, 2010. Additionally, the government will underwrite the banks’ debts and loans in return for a fee. This announcement follows a 26 percent fall in Irish bank shares on Monday, September 29.
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 guarantee by the government means that the Irish people will provide backing for as much as €400-500 billion of liabilities.
Mr. 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. 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 move by the government comes on top of its recent guarantee to cover the first €100,000 worth of deposits, which is more than the UK guarantee of £50,000. It also puts additional pressure on the UK government to increase its backing of savings and banks.
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