Bank guarantee scheme to come before Dáil next week

THE DETAILS of the Government's bank guarantee scheme are likely to come before the Dáil next Wednesday, Taoiseach Brian Cowen said yesterday.

Mr Cowen said that the Government was very clear in its objectives, but it wanted to ensure that the technical detail met the requirements of everybody concerned and was as accommodating as possible without taking on inordinate risk.

"On that basis, it seems clear it will be next week before we take this scheme," he added.

"I think it will probably be Wednesday afternoon or sometime after the budget and the budget debate."

Dealing with it on Wednesday or Thursday of next week would be the sensible approach, Mr Cowen said.

"That is the route we should take considering what has to be done, who we are talking to and that they have to return to us to confirm their views," he added.

The Taoiseach was replying to Fine Gael leader Enda Kenny, who said that his party would facilitate the Dáil sitting on Friday, Saturday or Monday to allow a debate on the guarantee. Mr Kenny said there was evidence from all over the country of the squeeze banks were putting on small businesses, which he understood was related to the liquidity problem.

"While there is a guarantee in place in name, in political or legal terms this can have no impact until it has been passed by the House," Mr Kenny added.

Mr Cowen said that many TDs took the view that the guarantee should be extended to other banks with a retail presence in the State.

Issues had arisen about which they had to be satisfied in terms of how they ring-fenced the assets which would be available within the jurisdiction and what would be the view of the headquarters or parent group on the assets should anything occur.

"All these technical issues have to be sorted out," Mr Cowen added.

"These banks are in a different position from those which are incorporated and headquartered in this country."

Labour leader Eamon Gilmore said the arrangements the Taoiseach had outlined were wholly unsatisfactory.

"By all accounts, this is going to be no ordinary budget, but even in a normal year the Wednesday and Thursday of budget week are busy days in terms of our parliamentary work," he added.

Mr Cowen said that the scheme would be brought before the House as soon as it was ready and approved by the Cabinet.

Earlier, Mr Gilmore said that reference had been made to "dated subordinated debt - lower tier two" being subject to State guarantee.

He understood that the debt was the arrangement whereby very wealthy people made money available to the banks, effectively as a loan, and received far higher interest than a normal depositor

The understanding was that if anything went wrong with the banks the money was gone.

He was advised, he said, that the amount involved could be in the order of €10 billion.

Mr Cowen said that the Government was not including tier one capital arrangements, which included equity or equity-like instruments.

"However, all other liabilities are being guaranteed by the State on the basis of the advice from those who are competent to so advise the Government," he added.