The European Commission has approved the revised Irish Government guarantee scheme for financial institutions that extends the maturity of instruments covered by the plan to five years from two years.
The European Commission has today approved a revised Government guarantee scheme for financial institutions that extends the maturity of instruments covered by the plan to five years from two years.
The Minister for Finance Brian Leniha welcomed today's decision saying that acess to longer-term funding would help to stablilise the banking system in Ireland. He added it would also support the funding needs of institutions
covered under the guarantee and help enhance the availability of credit.
The programme is designed to help stabilise financial markets by providing guarantees on deposits and debt to eligible banks active in the Irish market after the global credit crunch made it difficult for banks to issue debt.
Under the Government scheme, which was introduced in Septemer 2008, the State has guaranteed all deposits, covered bonds, senior debt and dated subordinated debt at financial institutions in six Irish financial institutions – Allied Irish Bank, Bank of Ireland, Anglo Irish Bank, Permanent TSB, EBS and Irish Nationwide.
"The new guarantee excludes subordinated debt and extends to instruments with a maturity of up to five years. Previously, liabilities were covered until September 29th, 2010 maximum," the Commission said in a statement.
"Secondly, the temporal scope of the scheme has been modified. The instruments guaranteed under the scheme may be issued from December 1st 2009 until June 1st 2010," it added.
A draft scheme entitled the Credit Institutions (Eligible Liabilities Guarantee) Scheme, 2009 will be published shortly by the Minister for approval by the Oireachtas.
"The new guarantee scheme will give credit institutions in Ireland access to medium-term state-guaranteed financing and provide Ireland with an effective means of restoring confidence in the financial markets, while at the same time limiting distortions of competition " EU Competition Commissioner Neelie Kroes said in a statement.
Additional reporting: Reuters
