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Lenihan Plans Withdrawal Of Bank Guarantees

by Jason Gorringe, Tax-News.com, London

26 August 2010


Irish Finance Minister, Brian Lenihan has warded off calls from Irish banks AIB and Anglo for an extension to deposit guarantees due to expire in September. Both banks are receiving medium-term state support to shore up their balance sheets.

Ireland introduced financial assurances on bank deposits and most securities in September of 2008 for a two-year period. It was previously said that other, more limited guarantees would be removed by year-end.

Speaking to public broadcaster RTÉ, Lenihan said, “We want to see [banks] off the guarantee as soon as possible. Elements of the guarantee will not be continued from September.”

The remaining limited guarantees, Lenihan disclosed will be “phased out over time,” without confirming a definite timeframe. It was indicated by the Finance Minister that as part of a European approach, these limited guarantees might be extended to shore up the recovery of the banking sector.

The cost of the Irish bank bailout was estimated last week at EUR29bn (USD36.8bn). This figure was recently revised upward, with funds being made available to Anglo during 2010 increased to EUR10.44bn this month, from EUR8.58bn previously.

TAGS: economics | business | Ireland | fiscal policy | banking | international financial centres (IFC) | offshore

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