End of government guarantee poses a funding challenge for banks

BANKS will face a critical challenge to raise funds once the blanket government guarantee expires.

That will happen at the end of September and will make funding “the most important challenge facing Irish banks”, said Fitch Ratings. However, the agency said the outlook will have improved by then as losses from loan transfers to NAMA will be fully dealt with.

When the guarantee ends, banks will still be dependent on the European Central Bank and state guarantees, leaving the sector open to negative sentiment.