Deposits are safe in banks, insists Taoiseach

TAOISEACH Brian Cowen has sought to reassure people that deposits in the country’s banks are secure as talks continue about a possible bailout of the sector.

In a statement on the issue in the Dáil, Mr Cowen said he wanted to “reiterate the strength of the Government’s commitment to safeguarding deposits in the Irish banking system in view of the recent ill-informed and inaccurate speculation by a small number of external analysts and commentators on this issue”.

Customers’ deposits are currently protected by two separate, but complimentary, schemes.

Under the Deposit Guarantee Scheme (DGS), deposits of up to €100,000 are guaranteed. This scheme has no expiry date.

Today, the Dáil is expected to approve the extension of the wider bank guarantee scheme — known as the Eligible Liabilities Guarantee (ELG) — for a further year.

Among other things, that scheme guarantees the balance of deposits over the €100,000 limit of the DGS.

In other words, if an individual has a deposit of over €100,000 in a bank, the first €100,000 will be guaranteed under the DGS and the excess will be guaranteed under the ELG.

“The protection of depositors has been and remains one of the over-arching priorities of the Government in responding to the difficulties in the Irish banking system,” Mr Cowen insisted.

His statement on the banks came in response to demands by TDs earlier in the day. Despite efforts by the Government to indicate it would be a routine statement outlining the existing state of play, speculation quickly mounted that Mr Cowen would announce some form of EU bailout for the banks. The speculation proved ill-founded, however. Instead, Mr Cowen pointed to the fact that Finance Minister Brian Lenihan was in Brussels for talks which continue today.

“Clearly there is a need to bring stability to markets, here and elsewhere, as the current costs of borrowing are very high and are at a level that would make it difficult for banks here to operate as engines of recovery,” Mr Cowen said.

“It is important to point out that the European Central Bank continues to meet the liquidity requirements of the banking system.

“In addition, this Government’s priority throughout the banking crisis has been to safeguard deposits and this is a concern shared by governments across Europe and the European Commission.

“It is in all of our interests that we find a credible, efficient and above all workable solution that will provide assurance to the markets and thereby restore confidence and stability,” he added.