Minister for Finance Brian Lenihan said tonight he will consider applications from non-Irish owned banks to be considered in the Government's €400 billion guarantee scheme, as a lengthy debate on the legislation continues in the Dáil.
"The Minister has indicated that he will consider applications to join the guarantee scheme from financial subsidaries with a significant high street retail presence here. These will be considered on a case by case basis," the Department of Finance said in a statement.
The Government had earlier said the scheme would apply only to the Irish-owned banks.
Fine Gael’s finance spokesman Richard Bruton welcomed the Minister’s move to address concerns raised by his party on the banks not under guarantee.
“This move will hopefully help to deal with the equity, fairness and competition issues raised by Fine Gael relating to this matter. It is also hoped that this move will help remove one of the potential barriers to the operation of the scheme as outlined,” he said.
“Fine Gael recognises that there may be further work to be done with regard to the “ring-fencing” of the Irish operations to be covered by the guarantee and will offer any additional advice possible on the matter.”
But the Labour Party said it was “deeply concerned” at the implications of the announcement.
Finance spokeswoman Joan Burton said it threatened to open a “Pandora’s box” and increased further the potential exposure of the Irish taxpayer.
“We still do not know the full extent of the financial exposure from the original proposal, but this move will clearly extend it significantly,” she said.
Ms Burton said the development “simply confirms that the government had never fully thought through this proposal and deepens our concern about the legislation”.
The debate on the Government's emergency legislation to give a €400 billion guarantee to the six leading indigenous financial institutions looks set to continue late into the night.
While Fine Gael backed the Bill in principle at the conclusion of the second stage debate in the Dáil late last night, the party has been more critical during the committee stage of the legislation as it has been debated in the Dáil today, expressing reservations about some key measures and what it says are omissions and lack of detail.
Party leader Enda Kenny honed in on the effect that the legislation would have on the other Irish trading banks that are not wholly Irish-owned. They include NIB, Ulster Bank, IIB, and Halifax.
Mr Kenny said the fact that those retail banks ' though based in Irleland' were not included in the scheme raised the possibility of money moving from those banks to the wholly Irish banks.
He urged the Government to find a means of ensuring a "level playing pitch".
"Anecdotal evidence suggests that significant sums are being transferred out of these banks and in to banks that will be covered by the schme. This would appear to be a particular concern in border county area and may also be an issue in the UK," he said of the legislation.
Labour Party leader Eamon Gilmore said this morning that that he would not support the Credit Institutions (Financial Support) Bill unless some of his specific questions and concerns were met.
In particular he noted the salaries being earned by top executives of the banks - the six chief executives of the banks covered by the scheme earned some €13 million between them in 2007.
"We know that the top executives of banks have been paying themselves in millions. Will any limits, restrictions or constraints be put on the continuing arrangements for top executive reward in the banks?
"These are among the issues addressed in a series of amendments to the Bill by the labour Party. How the Government responds to those amendments will determine whether the Labour Party will support this Bill.
"I want clear answers. I want to know how much we are being asked to guarantee, what the banks will pay for the comfort, whether we will see the exact conditions before the guarantee is signed and whether the Government will allow top executives of the banks to keep their fists in the till," said Mr Gilmore.
Meanwhile, the debate on the legislation has proceeded at a very slow place today. By 5pm, deputies had been debating amendment number one for a total of six hours. Another 30 amendments are likely to be tabled.
While no time limit has been imposed by the Government whips, there have been some suggestions from Fianna Fáil TDs that the opposition is involved in a filibuster and that a decision may be taken to apply a guillotine.
However, Labour in particular has been saying that it will not support the legislation until some concession has been made.
Two former leaders of the main opposition parties, Michael Noonan of Fine Gael and Pat Rabbitte of Labour this afternoon asked was the crisis facing the banks one of liquidity or of solvency.
Mr Noonan said that the nature of the legislation, including its very robust measures to allow for the merging of financial institutions, suggested that the Government may be anticipating a solvency problem.
In the same vein, Mr Rabbitte said: "There is a credible school out there who believe that Irish banks have a capitalisation problem."
Other amendments tabled by the opposition include demands for more oversight of the banks, for the terms of the guarantees to be clarified, and for the scheme to be extended to other banks with retail branches in Ireland.
