Deposit Guarantee Extended - Not Surprising, but Welcome News.

By Eoin Fahy, Wednesday, 10th November 2010 | 0 comments

The Government has this morning announced that the current bank deposit guarantee, due to expire at the end of the year, will be extended at least until June of next year. The Government also said that in practice it wishes to extend it to the end of 2011, but under EU rules it can only get permission to extend for six months at a time.

This development is welcome as it is clear that in current market conditions banks could have difficulty in retaining deposits without the guarantee being in place.  It's also helpful that there was no attempt to restrict the scope of the guarantee on this occasion (unlike previously when there was an initial attempt, subsequently abandoned, to create a distinction between retail and corporate deposits).  And it's important too that the Government has indicated that it intends to keep the guarantee until the end of 2011, albeit that the extension to the second half of the year is dependent on EU approval.

As a reminder, the guarantee covers all deposits of any kind with eligible banks, provided they have a maturity of less than five years. 

Eligible banks are Irish Life and Permanent, Bank of Ireland, AIB, Anglo-Irish, EBS, ICS, and Irish Nationwide.

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