Ending deposit guarantee scheme would ‘let banks boost profitability’

The removal of the Government guarantee of deposits should lead to increased profitability in the banking sector and help return the banks to an independent funding model.

Last week, the secretary general of the Department of Finance, John Moran, said it was Government policy to wean the pillar banks off the eligible liabilities guarantee scheme over the first quarter of next year.

The scheme guarantees deposits over €100,000 held with the Irish covered banks. It costs the pillar banks roughly €1bn in fees every year, which adds about 110 basis points to the cost of funding.