Deposit guarantee may be extended to foreign banks

Finance Minister Brian Lenihan has said the Government's scheme to guarantee the financial security of six Irish-owned banks may be extended to other financial institutions operating in Ireland.

Mr Lenihan made the revelation as the Dáil and Seanad continued to debate the proposed legislation into the early hours of this morning.

The Seanad has now passed the emergency legislation that gives effect to the €400bn banks guarantee by 39 votes to five.

Earlier, the Minister said possible extensions of the measure would only be approved after serious consideration due to the risk they could pose to the Irish taxpayers.

Mr Lenihan told the Seanad this morning that Ireland had no choice but to act on its own this week to protect the six Irish-owned banks.

He said foreign-owned banks that want recognition under the Irish scheme can look for help from their own governments, some of which are far more powerful than Ireland.

British banks are already criticising the Irish move, claiming it is anti-competitive, particularly as many of the Irish banks are active in the UK.

The chief executive of the British Bankers' Association says measures to bring stability to the financial markets should be equitable towards financial institutions across Europe.