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The European Central Bank said the Government should have “properly'” informed European Union officials before announcing new laws to guarantee the deposits and borrowings of six financial institutions.

“It would have been advisable to properly consult other EU authorities on the envisaged legislative plans,'' the ECB said in an opinion on the Government program published on its website today. The ECB is also concerned the guarantee provides the lenders covered by the scheme with “preferential treatment”.

The government last week announced the two-year guarantee to shore up confidence in a banking system buffeted by turmoil in credit markets. The German, Danish and Belgian governments today stepped in to support financial institutions hit by the credit crunch.

The Irish government asked the ECB for its view and the central bank's opinion is not legally binding.

Financial shares across European fell the most in a week today with the Bloomberg Banks and Financial Services Index declining as much as 8.5 per cent, the biggest decline since December 1996, led by a plunge in Hypo Real Estate Holdings AG and Anglo Irish Bank.

Neelie Kroes, the EU's top antitrust chief, said the plan will pass EU scrutiny with “some fine tuning”.

“Some concerns have been raised about the scope of the measure,” Mr Kroes told the European Parliament's economic and monetary affairs committee in Brussels today.

“The measure doesn't seem to cover all existing credit but also future credit.”

She added: “The measure also raises issue of discrimination. I welcome signs of opening of Irish authorities to apply the measure to other banks. I'm confident that with some fine tuning the Irish scheme can be put into line with EU rules.”