Bank guarantee blamed on poor advice

The state guarantee of the banking system introduced five years ago that eventually undermined the country’s economic sovereignty was based on a lack of proper information, according to experts.

On Sept 29, 2008, the then finance minister, Brian Lenihan, signed into legislation one of the most contentious acts in the history of the State. The decision had been made in the early hours of that morning to guarantee the €440bn of assets and liabilities of the domestic banks.

It lumbered the State with a contingent liability that caused investors to lose confidence in the Government and forced it to accept a bailout in Nov 2010.