TAOISEACH BRIAN Cowen said banks would "pay a substantial fee" if they chose to avail of the Government's deposit guarantee. Speaking last night, just hours after the Oireachtas passed legislation on the €400 billion scheme, Mr Cowen said: "This is not a free guarantee."
His comments came as it emerged that Minister for Finance Brian Lenihan has referred to the Financial Regulator an e-mail circulated by the son of Irish Nationwide boss Michael Fingleton earlier this week seeking new deposits, citing the protection of the Government's new bank guarantee plan.
The e-mail, received from financial sources in London, was sent by Michael Fingleton jnr to employees in a global investment bank stating that, under the Government's guarantee scheme, the building society "represented the safest place to deposit money in Europe".
The approach by Mr Fingleton jnr, who works in the building society's Wigmore Street office in London, flies in the face of Mr Lenihan's statement to the Dáil on Wednesday night in which he said he was determined to ensure companies did not engage in anti-competitive practices if they were protected by the guarantee.
Addressing a forum of business leaders in Dublin last night, the Taoiseach said: "In the event that the insurance given is not called upon, the Government finances will benefit from the levy charged for the guarantee. In the event that any losses arise from the guarantee scheme, the Government will ensure that they are borne by the banking sector rather than the taxpayer."
Following yesterday's enactment of emergency legislation giving statutory backing to the guarantee scheme, the legislation is scheduled to be introduced on Tuesday, after being submitted for formal approval at the weekly Cabinet meeting. Government sources last night indicated that, under the scheme, a separate contract will be drawn up with each of the six financial institutions (or seven, if Ulster Bank is included) covered by the scheme.
According to one senior source: "There will not be a standard price. The amount that will be charged will reflect the risk involved for the State as well as the nature of the balance sheet of the particular institution."
Mr Lenihan signalled the Central Bank was working on a scheme of charges which he said would bring significant benefit to the taxpayer. He also said his officials had been in discussions with the banks, including people representing the public interest on their boards.