Government confident EU concerns can be addressed

The Taoiseach Brian Cowen and the Minister for Finance Brian Lenihan pledged today to consult with fellow European Union leaders on any perceived concerns over the Government’s bank guarantee plan.

"We are obviously anxious to work with partners to see in what way we can move the matter forward," Mr Cowen told reporters on the sidelines an Ibec forum in Dublin.

"The moves made last week by government were essential, were in the national interest and any issues thereafter we are prepared to discuss," he said.

He also said the plan could accommodate banks beyond Ireland’s six domestic institutions. "We have indicated and made provision in the legislation for the possibility that banks other than the six that are originally mentioned being accommodated in some way," Cowen said.

Earlier, Mr Lenihan said he was confident that Government will be able to adequately address the concerns the European Union has raised.

Speaking following a meeting with EU Competition Commissioner Neelie Kroes last night, Mr Lenihan said other countries saw Ireland's move as  one that could be copied by other member states.

In particular he undertook to deal with fears the scheme could lead to an inflow of funds to banks covered by the Government's guarantee; unfair competition and competition between branches of different banks in Ireland.

"We agreed a scheme to address that concern in terms of the balance sheets of Irish banks and we can make progress on that," Mr Lenihan told RTÉ Radio.

The Minister added that one of the points being raised with Irish banks was that "executives that promoted irresponsible lending were being promoted excessively".

Details of the Government's scheme are expected to be discussed at a special Cabinet meeting this evening. The scheme is to be extended to non-Irish owned banks operating in the state and five have so far sought inclusion.

Last night Ms Kroes said the Irish proposals could be tweaked to make them acceptable. "I am confident that with some fine-tuning, the Irish guarantee scheme could be put in line with EU law," she told a hearing at the European Parliament.

An initial proposal by Dublin raised concerns over the scope of savings covered and its availability to non-Irish banks, she added..

Ireland issued the first bank guarantee last week, prompting criticism of a fragmented European Union response. Germany's move spurred similar action by Austria and Denmark.

Additional reporting: Reuters