DUBLIN--Ireland will start to withdraw its bank guarantee scheme
for troubled lenders from March 28, in a major sign the banking
system is emerging from crisis, finance minister Michael Noonan
said Tuesday.
As the country's banking crisis flared, the Irish authorities
were forced to bring in the Eligible Liabilities Guarantee in late
2010, replacing an even more expansive "blanket" guarantee by which
Ireland had guaranteed most types of liabilities held by stricken
lenders since September 2008.
The finance ministry and the country's bailout lenders have long
wanted to phase out the ELG that covered 73 billion euros ($96.4
billion) of deposits and senior bonds held by Irish banks, but the
deep debt crisis both at home and in the and euro-area forced the
government to prolong the guarantee for much longer than
anticipated.
Ireland pumped in huge amounts to rescue its banking system from
collapse during the past five years amid a property market crash,
causing the government to request an international bailout in late
2010. Dublin has said it is confident it will re-secure full market
funding when the European Union and International Monetary Fund
disburse the last of their EUR67.5 billion in emergency loans at
the end of this year.
Ending the bank guarantee for new liabilities was "the right
time to do it" and was "motivated by policies to normalize the
banking system" and a sign that Ireland is emerging from its
bailout, Mr. Noonan told a media briefing.
In return for the guarantee, Ireland received about EUR1.1
billion last year in fees from the participating banks, including
Bank of Ireland PLC, Allied Irish Banks PLC and Permanent TSB. Mr.
Noonan said that the loss of such fees was already accounted for
and wouldn't disrupt his budget plans for this year.
Some lenders have long complained about the cost of the
guarantee, claiming it restricted their capacity to lend into the
Irish economy.
A separate guarantee will continue to cover individual retail
deposits, Mr. Noonan said.
Write to Eamon Quinn at eamon.quinn@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires