The Irish government announced it would be passing a law to guarantee all deposits in the country’s banks upsetting the UK banking industry who are complaining of unfair competition.
The law is still being debated by the Seanad, Ireland’s upper house, and ministers are considering to extend the scheme to foreign banks that have a large number of Irish depositors.
Two major banks, the Ulster Bank and National Irish Bank, unsurprisingly have a large Irish customer base but are owned by companies outside the Repblic of Ireland. The finance minister said applications would be considered on a case by case basis, according to BBC news. However, Finance Minister Briand Lenihan said the Irish state was deep into the banking system and must make sure that taxpayers are protected.
The government’s 400bn euro guarantee covers Allied Irish Bank, Bank of Ireland, Anglo Irish Bank, Irish Life & Permanent, Irish Nationwide Building Society and the Educational Building Society.
The British Bankers’ Association worried that British banks will now be put at a competitive disadvantage when seeking deposits from retail customers.
Some UK depositors are now considering moving their savings to Irish banks. The Bank of Ireland confirmed a steady increase of phone inquiries and the Post Office, whose savings products are backed by the Bank of Ireland, too has seen increased customer activities.
Editor’s opinion: Perhaps UK banks should take a leaf out of the Irish and French banking systems? For UK banks to be worried about disadvantages then maybe there should be more emphasis on protecting taxpayers and depositor investments rather than loose regulation on risk taking banks and short selling traders. Perhaps the average taxpayer is tired of being dragged down with the wealthy bankers who got themselves into their own mess?
What do you think?
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