THE FINANCIAL Regulator has asked the six Irish banks covered under the State guarantee for new business plans showing how they plan to reduce risks facing them and has placed "officers" in each bank to scrutinise how they will be run.
The regulator's closer vigilance of the four banks and two building societies emerges as the banks prepare to submit formal "acceptance deeds" later today confirming their participation in the scheme.
The six banks must agree to the annual cost of the scheme set out in the deeds received from the Department of Finance on Wednesday.
The annual charges to some institutions have also emerged.
AIB will pay less than €130 million a year to participate, while Bank of Ireland will pay in the region of €115 million a year under the two-year guarantee. Irish Life Permanent will pay less than €50 million a year, while EBS building society will pay less than €15 million a year.
It is not clear how much the scheme will cost Anglo Irish Bank or Irish Nationwide Building Society.
Analysts at investment bank Merrill Lynch estimated in a report on Monday that Anglo may pay €129 million a year, while Irish Nationwide could be charged €25 million a year.
Minister for Finance Brian Lenihan has said that Irish banks, including the five foreign-owned Irish institutions, will have to pay an estimated €500 million a year to avail of the €485 billion guarantee.
Mary Burke, the regulator's head of banking supervision, wrote to the six Irish lenders this week seeking revised business plans in light of the guarantee scheme.
Bankers did not interpret the request as "prescriptive" but said the regulator wanted details of how they would run the banks, showing how they would reduce future risks and comply with the scheme's targets.
The regulator has assigned up to three "authorised officers" this week to each of the six institutions to monitor the running of the banks as part of the heightened monitoring under the terms of the guarantee scheme.
The regulator told the banks that the officers would be "in attendance on an ongoing basis". A spokeswoman for the regulator said: "We have already stated that there would be an increased level of on-site supervision."
The institutions have been preparing offices and desks in their headquarters for the regulator's officials.
The appointments are in addition to the new directors that the institutions must appoint who will represent the interest of the taxpayer.
Mr Lenihan said that State investment in the banks was the "very final option". He said he would be "in a much better situation to know what is happening in the banks" and whether they needed to raise extra capital once the scheme was in place. He said that this work was taking place this week.
Mr Lenihan said in a speech that the scheme was "a necessary first step" and "the cheapest bailout in the world so far", compared with other countries where "billions and billions of taxpayers' money are being poured into financial institutions".
The guarantee allowed the Government to "move on and examine other questions which may have to be addressed to ensure that the banks are put on a sound footing", Mr Lenihan said in a scheduled speech.
In a "market note" posted on the Department of Finance website on Wednesday, the department said guaranteed banks would not have to cover the State on the cost of bailing out one of the guaranteed banks should it default on its debts. The note will reassure concerned banks which had feared they would have to pay the cost of protecting another guaranteed institution, should the State be forced to save it.
Irish Life Permanent, the worst performing Irish bank stock yesterday, fell 12.6 per cent after revealing a debt exposure to the bankrupt Icelandic banks which have taken over by the state.