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http://news.bbc.co.uk/1/hi/business/7646217.stm

The European Commission has said it is 'in close contact' with the Irish government over its decision to guarantee all bank deposits.

Concerns have been raised that Dublin's move may give Irish banks an unfair advantage over foreign competitors.

The commission has also called for stronger central supervision of government-led guarantee schemes.

Separately, the EU has cleared the UK government's nationalisation of British bank Bradford & Bingley.

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http://www.telegraph.co.uk/finance/finance...-guarantee.html

European regulators are now investigating Ireland for anti-competitive behaviour after the state guaranteed the €400bn (£315bn) of savings and loans held by six of its largest financial institutions in what bankers said was a de facto nationalisation of the industry.

The two-year guarantee gives Ireland's banks a clear advantage over other countries' lenders by offering any depositor 100pc security. Irish bank savers in the UK or other countries will be protected by the deal. There are already reports of customers moving their cash to Irish banks.

Royal Bank of Scotland's Irish subsidiary Ulster Bank was this afternoon added to the list of banks eligible for the guarantee, taking the total to seven.

Britain today expressed its concern and has brought the matter up with the EU. A spokesman for Prime Minister Gordon Brown said: "We just want the Irish government to look quite closely at the arrangements they are putting in place to make sure they comply with EU competition law."

EU Competition Commissioner Neelie Kroes said she was in close touch with the Irish authorities. Asked whether the Commission had competition concerns, she said: "We are in close contact with the Irish authorities."

Bankers said European government and regulators will now have either to adopt the Irish model or force Ireland to retreat. In Britain, copying the move would mean guaranteeing the nation's £2,053bn of retail and corporate deposits.

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This line from brown is an absolute belter!

"We just want the Irish government to look quite closely at the arrangements they are putting in place to make sure they comply with EU competition law."

This is the man who wants to trample all over competition regulation in order to force through the Lloyds takeover of HBOS!

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If the worse did happen the Irish government could not possibly honour this promise. They are liars, but it seems the lie is having the desired effect.

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This line from brown is an absolute belter!

This is the man who wants to trample all over competition regulation in order to force through the Lloyds takeover of HBOS!

Exactly - he is taking hypocrisy to exciting new levels!

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Here's something I wrote about it in another thread. I'm not surprised the EU is 'interested' in this, it totally skews things in favour of Irish banks at the expense of other European banks. Either the whole of the EU follows the Irish or it is likely that, as far as debt guarantees are concerned, Ireland will have to reconsider.

This is much more than deposits:

http://www.taoiseach.gov.ie/index.asp?locI...&docID=4026

If Irish banks can be financed with a State guarantee on their bonds, in a world with less money floating around, it will be at the expense of other banks.

It's also a serious credit printing machine they are creating here. Irish banks can issue state backed senior debt at will and lend agressively.

<Edit to add: the state guarantee of the banks' debt is not limited to Irish holders, any foreign holder will be protected!>

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If the worse did happen the Irish government could not possibly honour this promise. They are liars, but it seems the lie is having the desired effect.

Yes they could, by issuing governement debt. It does however have an impact on the euro's credibility which affect the whole of Europe. Amazing and rather crazy move IMO.

<Edit to spell properly>

Edited by williamdb

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Of course being in NI gives us the opportunity to take advantage of this - I know of a great many people who have been making large deposits to Irish backed banks! So in that sense, it does seem a bit unfair on those who are not backed - however I don't honestly think that 'fair' has any meaning anymore. I dont see how it can be considered fair to bailout those who took a risk and lost (at the expense of the more cautious) yet it is unfair for a country to guarantee the safety of money belonging to those cautious and sensible within their population!

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cos' they are massively different to northern ****.

the eu needs a good slapping from some competition, pile of untouchable monopolist shite.

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Yes they could, by issuing governement debt. It does however have an impact on the euro's credibility which affect the whole of Europe. Amazing and rather crazy move IMO.

<Edit to spell properly>

Well they couldn't possibly honour it without bankrupting themselves or causing hyperinflation.

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Well the EU can't overturn it now because the Irish banks will collapse.

But with all the 'hot money' flowing won't inflation accelerate ?

I know banks are hoarding capital but they'll have to lend some out won't they ?

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Well they couldn't possibly honour it without bankrupting themselves or causing hyperinflation.

Bankruptcy I'm not sure, and inflation yes nwhich would be damaging to the whole EU.

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Well the EU can't overturn it now because the Irish banks will collapse.

Yes but if they don't it it is possible even more European banks will. All European banks are struggling for cash, hence the spate of rescues this w/e; it is possible that if one set of banks suddenly attracts much more liquidity, the others will be even worse off.

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That's funny. On the R4 news they said it was British banks , not the EC who complained about the Irish government's latest promise. That's rich coming from British banks. Shouldn't British banks (you know who you are) be more concerned with how not to risk depositors' money than with competing with other governments over how much bailout money they get? What the Irish government does is of no concern to British banks anymore than car makers in France should be concerned over how much assistance the Chinese government gives to Chinese car makers.

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Guest An Bearin Bui
Here's something I wrote about it in another thread. I'm not surprised the EU is 'interested' in this, it totally skews things in favour of Irish banks at the expense of other European banks. Either the whole of the EU follows the Irish or it is likely that, as far as debt guarantees are concerned, Ireland will have to reconsider.

The debt guarantee is the most worrying aspect of this whole deal. When I first heard about it yesterday, I thought it was a good idea as I was under the impression that it was merely a guarantee to honour savers deposits and a sleight of hand move that would stop the panic and never really need to be implemented. Now that I've heard more details, it's worrying. The guarantee of bonds and Tier 1, 2 and possibly 3 stuff is just bizarre. They might as well just have nationalised all Irish banks.

There's an interesting thread on this over at thepropertypin, Ireland's equivalent of housepricecrash.co.uk (kind of). It sounds now like a very rash move that makes no attempt to force the banks to sort their bad debts out and recapitalise. Sounds more like a free lunch for the banks as they basically can load up with debt now with no regard for maintaining their capital reserves and with the added element of the EU scrutiny, I can't see how this can last unless all EU govts go the same way.

Property Pin thread

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Pressure on Govt to extend bank scheme

Wednesday, 1 October 2008 19:23

As emergency legislation on the bank guarantee scheme works its way through the Dáil and Seanad, the Government is coming under increasing pressure this evening to extend protection to non-Irish owned banks operating here.

The British Bankers' Association has accused the Government of distorting competition by singling out Irish banks for the guarantee.

'The extent of the guarantee has clear consequences for firms competing to win retail deposits and, while we support proposals aimed at re-reintroducing stability to the financial markets, we need fair play for financial institutions across Europe,' a statement from the association said.

In the Dáil, Fine Gael has called for the scheme to be extended, while the Labour Party has demanded more information about the plan.

A spokesman for the Department of Finance said this evening that any application from a non-Irish owned bank to be included in the scheme 'would be considered.'

Meanwhile, the Financial Regulator has said the state guarantee for financial institutions will result in enhanced regulations for banks.

In an interview with RTE News, Patrick Neary said this would cover the areas of corporate governance, strategy and business plans of Irish banks.

The legislation brought before the Dáil last night sets out a series of dramatic measures the Government can take to maintain financial stability and deal with what it describes as a serious disturbance of the economy.

It was already clear from yesterday's intervention that financial support for Irish-owned Irish banks and building societies, facing difficulties due to the global credit squeeze, would be provided by the Government at some commercial cost.

But this legislation does not stop there. The Government is reserving the right to take out shares in one of the Irish financial institutions if it thinks it necessary.

In addition, the Minister for Finance is taking upon himself powers normally held by the Competition Authority to sign off on a merger or acquisition deal involving an Irish bank if he believes its in the interests of financial stability.

The legislation, in an attempt to re-assure taxpayers, says terms and conditions will apply to any aid it provides to banks but it is short on specifics. Fees and interest are to be worked out between the Department of the Finance and the Central Bank.

The safety net stays in place until the end of September 2010.

http://www.rte.ie/business/2008/1001/saving.html

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Guest vicmac64

What do they care - THEY WANT US IN THE EURO, they want control of the UK (just look at the disgusting laws they have enforced upon us). Why would they stop the Irish - they want to bleed the UK dry,,,, That is the game WAKE UP

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Guest Skint Academic
If the worse did happen the Irish government could not possibly honour this promise. They are liars, but it seems the lie is having the desired effect.

But by doing this they don't have to lie because all the foreign deposits are flooding in.

That is until the other countries follow suit. But then from a personal point of view, say you had moved your savings to an Irish bank already and the UK guaranteed all deposits as well, would you move them back to a UK bank?

I don't know much about the Irish government. Maybe they are as corrupt and as slimy as the British one (probably not though). But one thing I do know is that I do not trust the UK government to even be able to bail out the 35K limit it currently has (yet alone a 50K limit)

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What do they care - THEY WANT US IN THE EURO, they want control of the UK (just look at the disgusting laws they have enforced upon us). Why would they stop the Irish - they want to bleed the UK dry,,,, That is the game WAKE UP

as the banks are cannibalising each other, so are the economies that rely on banking. It just so happens to be Ireland and UK. No big conspiracy, just countries doing what they think ensures their own survival, as opposed to going out of the way to f someone else up.

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Surely a bank lending irresponsibly knowing the tax payer will pick up the tab if all goes wrong is anti-competitive.

Isn't the bank of England setting different interest rates compared to Europe anti-competitive.

Sorry I have zero sympathy for bankers, if we could get rid of the whole lot of them and the corrupt system easily then we should.

Good on the Irish, it is highly ironic that the are responsible for post office accounts which the UK government have been trying to get rid off.

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