Friday

29th Mar 2024

Irish bank guarantee unfair, say competitors

The Irish government's €400 billion plan to guarantee deposits and debts of six Irish banks has prompted protests from foreign-owned banks operating in the Republic.

The UK-owned Ulster Bank Group, Royal Bank of Scotland and Denmark's National Irish Bank have asked the Dublin authorities to be covered by the same guarantee, saying they will otherwise suffer a competitive disadvantage, reports the Irish Times.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

"There is a clear risk that customers are going to move their money into another bank, which makes totally sense in the situation, we see in the world today," spokesperson Jonas Torp from Danske Bank told Danish media.

Danske Bank is the parent bank of the National Irish Bank. Client deposits in Danish banks are guaranteed by the state up to €40,000, but this does not cover clients using Irish branches of the bank.

The Irish guarantee also covers customers using UK branches of the six Irish banks concerned.

"If this is legal, then I'm a banana," a British senior banker told UK paper the Times, arguing that the Irish guarantee amounted to unfair state aid.

Irish bank shares crashed this week amid fears that depositors were pulling out their money, but they recovered as soon as the rescue plan was announced.

"In the absence of a Europewide system, there is an onus on the Irish government as the sovereign body with responsibility in this state to take action," Irish finance minister Brian Lenihan said, according to the Financial Times.

Money paid by the Irish state as financial support under the scheme will be repayable with interest once funds to do so are available to the company, the draft bill states.

The European Commission has so far held back on implementing EU state aid rules during the ongoing financial turbulence.

"The European Commission ... is supporting .. the decision of Irish government to guarantee deposits with Irish banks," the commission's chief spokesman Mr Laitenberger said at a press conference in Brussels on Tuesday (30 September).

"This shows that public authorities in Europe can live up to the task of preserving financial stability and protecting savings where different EU countries are concerned."

The Irish parliament is expected to pass the bill today, while Irish Prime Minister Brian Cowen is in Paris for talks with French President Nicolas Sarkozy.

A similar guarantee may be offered by the French government, with measures announced at the end of the week, a spokesperson for the French president said, according to the Irish Times.

US must take responsibility for global crisis, Brussels says

The European Commission has expressed impatience with Washington over the defeat of a $700 billion bailout for Wall Street, calling on the US to "take responsibility" for the crisis. Meanwhile, fears are growing that the money central banks are pumping into markets are not putting out the financial fire.

Ukraine slams grain trade restrictions at EU summit

Restrictions on Ukrainian agricultural exports to the EU could translate into military losses in their bid to stop Russia's war, Ukrainian president Volodymyr Zelensky warned EU leaders during their summit in Brussels on Thursday.

Difficult talks ahead on financing new EU defence spending

With the war in Ukraine showing no signs of ending any time soon, EU leaders will meet in Brussels on Thursday and Friday (21 and 22 March) to discuss how to boost the defence capabilities of Ukraine and of the bloc itself.

Opinion

Why UK-EU defence and security deal may be difficult

Rather than assuming a pro-European Labour government in London will automatically open doors in Brussels, the Labour party needs to consider what it may be able to offer to incentivise EU leaders to factor the UK into their defence thinking.

Latest News

  1. Kenyan traders react angrily to proposed EU clothes ban
  2. Lawyer suing Frontex takes aim at 'antagonistic' judges
  3. Orban's Fidesz faces low-polling jitters ahead of EU election
  4. German bank freezes account of Jewish peace group
  5. EU Modernisation Fund: an open door for fossil gas in Romania
  6. 'Swiftly dial back' interest rates, ECB told
  7. Moscow's terror attack, security and Gaza
  8. Why UK-EU defence and security deal may be difficult

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Join EUobserver

EU news that matters

Join us