Govt seeking to extend bank guarantee
The Government is seeking to extend its guarantee of Ireland's struggling banks until the end of June next year, according to a report this morning.
The scheme, which was set to expire at the end of this year, is subject to review every six months by the European Commission.
According to The Irish Times the Government has applied for an extension to the scheme, which is designed to help Irish banks access funding and covers the majority of Irish retail and corporate deposits
An announcement confirming the extension to the end of June 2011 is expected later today.
However even with the guarantee in place, no Irish bank has been able to get cash on the markets since April.
Cautious investors are wary of lending to Irish banks, who have instead turned to the European Central Bank for their funding.
Figures from the Central Bank quoted by The Irish Times show that Irish lenders’ borrowings from the ECB stood at €119.1bn in September, a 25% increase on the previous month.
And while there are no indications that extending the guarantee until June will improve the ability of the banks to borrow, the Government knows that without the scheme Irish banks are unlikely to survive on their own.
