Deposit guarantee extension receives mixed response

The Government's decision to extend its deposit guarantee scheme to a number of foreign-owned banks operating in Ireland has received a mixed response today.

Ulster Bank, First Active, Halifax Bank of Scotland, IIB Bank, as well as Postbank, jointly run by An Post and Fortis Bank but licensed in Ireland, have all been given permission to apply for inclusion in the scheme.

Finance Minister Brian Lenihan says that there will be measures to ensure the move supports the Irish economy and not the banks and their parent groups.

However, ESRI chief economist John Fitzgerald says that he doesn't know how the Government could prevent the banks from using the guarantee to borrow money and use it recapitalise their head offices.