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Government ends the Bank Guarantee

Tuesday, February 26 16:48:18

The Bank Guarantee (the Eligible Liabilities Guarantee Scheme (ELG) Scheme) will end for all new liabilities from midnight on the 28th March 2013, Minister for Finance Michael Noonan said this afternoon.

As the State's financial situation improves, there have been growing expectations that the scheme, which was put in place by Fianna Fail in 2009 to protect deposits in Irish covered banks and thus lumped all banking debt on to the shoulders of the taxpayer, is set to be phased out.

No new liabilities will be guaranteed under the Scheme.

The ending of the ELG for new liabilities after the 28th of March 2013 marks a significant step in the normalisation of our banking system, the Minister said.

"It is important to stress that today's announcement will not impact the vast majority of bank customers as their deposits are covered by the Deposit Guarantee Scheme or DGS - a separate guarantee which has been in operation in Ireland since 1995 and is part of an EU-wide arrangement for deposit protection."

"I am very pleased to announce the Government's decision to end the bank guarantee for new liabilities from midnight on the 28th of March 2013.

The Irish banking system failed the Irish people and the mismanagement of the banks and the crisis has cost the Irish taxpayer E62 billion. All of the Government actions since taking office in March 2011, both at home and abroad, are designed to repair this damage and break the negative link between the banks and the State. We are making significant progress in this regard and the ending of the Guarantee for new liabilities marks another step forward," he said.

The Central Bank said that the Deposit Guarantee Scheme (DGS, which is administered by the Central Bank of Ireland, is not affected by the withdrawal of the ELG.

"Qualifying deposits in covered institutions continue to be guaranteed under the Scheme up to a maximum of E100,000 per customer per institution."