Commission approves amendments to €400bn bank guarantee scheme

THE European Commission has cleared amendments to the state’s €400 billion bank guarantee scheme.

The changes extended the guarantees to financial securities with amaturity of up to five years from the original date of end September 2010. And it will also include debt issued up to June 2010 from the original date in December 2009.

The scheme is aimed at stabilising financial markets by providing guarantees on deposits of up to €100,000 and on debt to eligible banks active on the Irish market.

A statement from the Commission said they found the measure anadequate means to remedy a serious disturbance of the Irish economy and in line with state aid rules.

When the scheme was first announced in October 2008 it covered just the six Irish-owned banks. But following complaints of anti-internal market discrimination, it was extended to cover five foreign financial institutions with a significant presence in Ireland.

The Commission said the new scheme aligns the guarantee fee to the remuneration structure set out in their guidelines on state aid designed to overcome the financial crisis.

“The Commission found the revised scheme proportionate and equipped with sufficient safeguards to limit distortions of competition and to avoid negative spillovers in other member states, while minimising the recourse to state funding,” the statement said.