The Government is seeking to extend its bank guarantee scheme until the end of this year in discussions with the European Commission that will be completed this month, Minister for Finance Brian Lenihan said today.
Last month, the EU approved the state guarantee scheme until the end of June and analysts expected the Government to seek a further extension.
The guarantee was first issued for some €400 billion of bank liabilities at the height of the credit crisis in September 2008, in what then was one of the most extensive scheme of its kind.
The guarantee, which was originally for two years, was amended last year to give banks scope to issue debt with maturities of up to five years, but still with a 2010 issue deadline and periodically reviewed by Brussels.
"The terms of the prolongation of the scheme being finalised with the Commission would see it being extended under the current terms and conditions until the 29th of September 2010," Mr Lenihan told the Dáil.
"Beyond this the guarantee would be modified to provide for a prolongation ... to the 31st of December... as an issuance window for liabilities of between 3 months and 5 years duration", he said.
"It is likely that the pricing of the guarantee will also change in line with the pricing structure outlined by the European Commission."
The Government would eventually like to phase out the guarantee, a big potential liability for a state with one of the euro zone's biggest debt burdens.