Banks With Headquarters Outside Ireland Safeguarded
Issued : 10 October 2008
Five banks with their headquarters outside Ireland are to be covered by the Irish government's e400 billion guarantee scheme, it emerged yesterday.
Ulster Bank, First Active, Halifax Bank of Scotland, IIB Bank and
Postbank will all be accepted into the bail-out deal - but with
limitations.
Only deposits at their Irish branches and operations will be eligible, finance minister Brian Lenihan indicated.
"Clearly, there will be some additional limitations and safeguards in relation to these operations to ensure that the support provided relates to liabilities arising from their position within the national economy, rather than to their wider group position," he said.
Mr Lenihan said the five institutions would fall under an extension to the scheme allowing cover for certain banking subsidiaries with a "significant and broad-based footprint" in the Irish domestic economy.
The rescue deal is now in the advance stages of being drafted and will be presented to the Dail (Irish parliament) as quickly as possible, he added.
Ulster Bank, which is considered one of the "big four" banks in both Northern Ireland and the Republic and mortgage provider First Active are both owned by the Royal Bank of Scotland.
IIB Bank is a wholly-owned subsidiary of the Belgium-based KBC bank.
Postbank is backed by the Irish postal service An Post and the troubled Benelux-based Fortis, whose Dutch operations have been nationalised while most of the rest of the company is being taken over by BNP Paribas.
Meanwhile, finance union IBOA yesterday called for the creation of a new forum on banking to oversee the future of the industry in Ireland.
The new body should be representative of all of the stake-holders in banking including customers and staff, according to Larry Broderick, general secretary of IBOA, which represents 21,000 workers in the financial services sector in Northern Ireland, the Republic and Britain.
He told a conference in Portlaoise that in the wake of the government's intervention, significant changes were likely in the structure of banking.
"IBOA is determined to ensure that in any restructuring, due care and attention is given to the interests of the many thousands of staff
working in the financial services sector who have made a substantial contribution to the profitability of these institutions in return for modest rewards," he said.
"The key priority for our members is job security which will, in turn, provide a guarantee for customers on the maintenance of services and standards," he said.
"The new landscape for the banking industry will also involve much stricter regulation and more transparent governance of the financial institutions in order to restore public confidence and to minimise the risk to taxpayers.
"This in turn should lead to a new culture in banking which should be based on a return to what might be called the traditional values of prudence, integrity and long-term stability."
