EU extends Irish bank guarantees until June 2011

November 10, 2010 | 22:08

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European Union competition authorities gave Ireland the green light on Wednesday to extend guarantees for crisis-hit banks until June 2011.

The EU's executive commission said the extended measures were "well targeted, proportionate and limited in time and scope."

"The commission, therefore, concluded that the guarantees are an adequate means to remedy a serious disturbance in the Irish economy," it said, adding that they were compatible with the European Union treaty.

The commission approved the extension, which covers certain short-term liabilities, for another six months at the request of Irish authorities.

The plan was first approved by the commission in November 2009 and extensions were approved in May, June and September of this year.

Irish Finance Minister Brian Lenihan said the lastest approval was "most welcome" and "will underpin the government's efforts to restore the financial system."

"The government is determined to rebuild consumer and investor confidence in our financial system which has an important role to play in ensuring businesses, and notably SMEs (small and medium enterprises), can invest for growth," he said.

Ireland was among several European countries that launched state aid schemes to prop up the banking sector after the global financial crisis exploded in 2008.

But Ireland remains fragile and concerns about its fiscal health have pushed up the country's borrowing costs to new heights.

The interest charged by investors to buy 10-year Irish debt soared to 8.180 per cent on Wednesday, the highest level since the creation of the eurozone in 1999.

AFP

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