Liquiditas

The Government’s guarantee scheme is to be extended to foreign-owned banking groups with ‘significant’ operations in the State, the Minister for Finance Brian Lenihan said today.

In a statement the Minister said Ulster Bank and First Active; Halifax Bank of Scotland (Ireland), IIB Bank, owned by Belgium's KBC; and Postbank, a joint venture between Belgian-based Fortis and the Irish post office; would be eligible for the scheme.

The Minister for Finance said the scheme was being extended ‘to certain banking subsidiaries in Ireland with a significant and broadbased footprint in the domestic economy.’

Taoiseach Brian Cowen has threatened Irish consumers that if confidence in global financial institutions is not restored by Monday the Government will continue to nationalise institutions. Insurance companies, public houses and ailing restaurants will be the next businesses to avail of the guarantee.

The Taoiseach has warned he will not tolerate any abuse of the Government’s bail-out scheme.

By including the foreign-owned banks the State is increasing its potential liabilities under the scheme by approximately 10 per cent to €440 billion. As the Budget deficit amounts to €9 million, the scheme has raised concerns regarding the ability of the State to shoulder the guarantee.

‘We don’t have the money ourselves,’ said the Minister, ‘but our credit’s good.’