Bank of Ireland welcomes the Ministers announcement today.

Minister for Finance announces the ending of the Bank Guarantee (Eligible Liabilities Guarantee Scheme)

Following a decision by the Cabinet, the Minister for Finance has today (26th February 2013) announced that the Bank Guarantee (the Eligible Liabilities Guarantee Scheme (ELG) Scheme) will end for all new liabilities from midnight on the 28th March 2013. After this date, no new liabilities will be guaranteed under the Scheme. The ending of the ELG for new liabilities after the 28th of March 2013 marks a significant step in the normalization of our banking system. It is important to stress that today’s announcement will not impact the vast majority of bank customers as their deposits are covered by the Deposit Guarantee Scheme or DGS – a separate guarantee which has been in operation in Ireland since 1995 and is part of an EU-wide arrangement for deposit protection.

Commenting on the announcement the Minister stated:

I am very pleased to announce the Government’s decision to end the bank guarantee for new liabilities from midnight on the 28th of March 2013. The Irish banking system failed the Irish people and the mismanagement of the banks and the crisis has cost the Irish taxpayer over €62 billion. All of the Government actions since taking office in March 2011, both at home and abroad, are designed to repair this damage and break the negative link between the banks and the State. We are making significant progress in this regard and the ending of the Guarantee for new liabilities marks another step forward.

The Government’s banking policy is a series of steps, all of which are interlinked:

The completion of independent Stress Tests of the banks’ capital needs in March 2011. These stress tests led to the private sector investment of €1.7 billion in Bank of Ireland in July 2011. The robustness of these stress tests has also allowed the banks to increase their deposits and access to international funding markets.

The assistance of those in Mortgage Arrears has been advanced through the new Personal Insolvency Regime in 2012 and complemented by the Mortgage Arrears Resolution Strategies being overseen by the Central Bank.  The involvement of the Central Bank ensures that they apply to all banks whether State owned or not. The resolution of mortgage arrears is essential to alleviate the mortgage difficulties and ensuring that the banking system is not constraining economic activity.

The removal of the banks in wind down (IBRC) from the Irish banking system reduces their drag on the economy and the cost of funds for Ireland. The liquidation of IBRC earlier this month removes the legacy of the worst excesses of the boom. The exchange of the promissory notes for long term Government bonds has been acknowledged by all analysts as the achievement of the best possible outcome for Ireland.

The creation of a cost effective banking system with customer service at its core. The Government is working to ensure that the banks have reduced their cost bases so as they can offer credit at as low a cost as possible, taking account of funding conditions, to their customers. This customer focus is vital in ensuring that the core banks continue to ramp up their SME lending and mortgage lending, both of which increased in 2012.

The work on improving the cost base of the banks is vital for their return to long term profitability. This return to profitability will be assisted by the shortly to be completed Mercer review of remuneration, which will ensure a full and proper assessment of this significant cost.

The Government is absolutely determined to maximize the value of this investment for the taxpayer and in the first two months of 2013, we have started to see returns on this investment with the sale for €1 billion of Bank of Ireland Contingent Capital and the sale of Irish Life for €1.3 billion. The return to profitability is vital for selling our remaining investment in the banks.

The success of the State’s bond issuances has played an important role in improving the cost bases of the banks. The State’s success in accessing bond markets has allowed the banks to raise international funding at lower levels than previously. This feeds directly into the competitiveness of our economy as the cheaper credit is to businesses, the more internationally competitive they are.

In tandem with our European partners, the Government continues to advance the implementation of the decision taken on the 29th of June 2012 to break the negative link between banks and sovereigns across Europe.

Ending of the Eligible Liabilities Guarantee Scheme)

This announcement also has a broader implication for the State by removing €73 billion of contingent liabilities from taxpayers. In return for guaranteeing such massive sums the State has received fees from the covered banks. However, in the budgetary arithmetic, we had assumed that the ELG Scheme would end in February 2013 and the removal of the scheme will have no negative impact of the budgetary position. In fact, I am confident that the ending of the scheme and the gradual removal of this liability from the taxpayer will also help to sustain Ireland’s re-entry to international markets.

It is important to stress that today’s announcement will not impact the vast majority of bank customers as their deposits are covered by the Deposit Guarantee Scheme or DGS – a separate guarantee which has been in operation in Ireland since 1995 and is part of an EU-wide arrangement for deposit protection. The DGS covers deposits up to and including €100,000 per depositor per credit institution or €200,000 in the case of a joint account. The DGS also covers members’ savings with their Credit Union.”


26 February, 2013

Notes to editors

The ELG scheme only affects customers of AIB Group (including EBS); Bank of Ireland Group; and Permanent TSB Group and their subsidiaries.

The removal of the ELG scheme will remove a costly distortion in the wider deposit market in Ireland and should improve conditions for the normal flow of credit in the economy.

Depositors will have the same protection as all other depositors across Europe. Their deposits will continue to be guaranteed by the Deposit Guarantee Scheme (‘DGS’) which covers the first €100,000 per depositor per institution, or €200,000 in the case of a joint account.

The vast majority of customers will not be impacted by today’s decision and will continue to be covered under the DGS scheme. In practice, this means that almost 98% of bank account holders whose deposits fall below the €100,000 threshold, remain covered by guarantee -irrespective of any change to the ELG Scheme.

The ending of the ELG scheme will have no impact on Credit Union members’ savings with their local credit union.

The ELG has already been removed in the UK with no adverse impact. As a result, about €12 billion equivalent in previously eligible deposits have come off guarantee in the UK with no effect on deposit volumes there.

It is important to note that liabilities incurred after January 2010 and before mid-night on the 28 March 2013 will continue to be guaranteed until their next maturity, subject to a maximum term of 5 years.

Rating agencies, Moody’s and Fitch both commented positively on the removal of the ELG.

Should depositors have queries regarding the operation of the DGS, they should contact their local bank branch or alternatively visit

A list of FAQs (Frequently Asked Questions) is available at the Department of Finance website at and at the NTMA (Schemes Operator) website

Total Government Guarantee fees received to the end of December, 2012, were some €3.8 billion in total, representing a significant drag on our investment in the banking system. The ending of the ELG scheme was already built into our Budgetary planning for 2013 and today’s announcement will have no negative impact on the fiscal side.


For more information see below:,