Ireland passes bank guarantee law amidst protests from neigbhour

K G P Sirikumara, Director, Legal and Compliance Department, Central Bank handing over the report to Prof. W D Lakshman

DUBLIN, October 3, 2008 (AFP) – Ireland has passed a controversial emergency law guaranteeing bank deposits despite protests that the move gives its financial sector a competitive advantage over neighbouring countries.

Dublin insisted it had to guarantee its six main banks to shore up the whole system, but Britain in particular argued the move is unfair amid fears savers could move their money from British banks into Irish accounts.

In a rare all-night session, Ireland’s lower house of parliament passed legislation giving a two-year blanket guarantee by 124-18 in the early hours of Thursday, followed by the Senate with 39 votes to five around breakfast time.

The Credit Institutions (Financial Support) Bill, was signed into law by President Mary McAleese Thursday afternoon, her office said.

The guarantee, estimated to be worth over 400 billion euros (563 billion dollars), safeguards retail and commercial deposits, as well as bonds, for two years. It is designed to protect Irish banks amid the global economic turmoil.

It covers Allied Irish Bank, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent, Irish Nationwide Building Society and the Educational Building Society.

On Wednesday,