OTHER BANKS:IRISH BANKS owned by overseas institutions, which have been excluded from the State's guarantee to protect the deposits and borrowings of six Irish lenders, have lobbied the Government to be covered under the scheme, claiming it places them at a competitive disadvantage.
Bank of Scotland (Ireland), which is among the top five banks operating in Ireland, has applied to Minister for Finance Brian Lenihan to be included in the guarantee announced yesterday.
A number of other Irish banks, whose parent companies are based outside Ireland, have also started discussions with the Government in an effort to be covered by the guarantee, claiming that it creates an uneven playing field within the banking sector as depositors will be drawn to the banks protected by the State guarantee.
The third-largest bank operating in Ireland, Ulster Bank Group, which is owned by UK bank Royal Bank of Scotland, has initiated discussions with the Government to be covered by the guarantee.
A spokeswoman for Ulster Bank declined to comment, as did a spokesman for the department.
Andrew Healy, chief executive of the Danish-owned National Irish Bank, said: “We have raised our concerns about the uneven playing field with the Government.”
NIB is understood to have requested a meeting with Government with a view to be included by the State cover. The bank has stressed that it does not need State assistance because of its strong financial rating but believes it has been put at a disadvantage because of the Government’s plan.
Mark Duffy, chief executive of Bank of Scotland (Ireland), said: “We like the scheme so much we want to join it. It is not a level playing field and we would like to be treated on the same basis.
“I cannot understand why some banks have not been included.”
Mr Duffy said the bank, which owns the Halifax retail bank branches in the Republic, had applied to be covered by the State.
Mr Lenihan told reporters yesterday morning he did not accept that the foreign-owned banks operating in Ireland had been left exposed by the plan.
He said they were subsidiaries of British banks and that the British government was “in a sense ultimate guarantor of those institutions as has been demonstrated by the whole nationalisation of Northern Rock”. He said bank customers were looking for “rival systems of protection in rival members states” but he accepted that this created “a dangerous tendency”.
“It is a tendency towards economic nationalism and I regret that but we are on our own here in Ireland and the Government has to act in the interests of the Irish people,” he said.
Mr Lenihan has called for a Europe-wide standard of protection for the banking system.
“It is important that Europe protects its financial system but in the absence of a Europe-wide system, there is an onus on the Irish Government as the sovereign body with responsibility in this State to take action,” he said.
One senior executive in a foreign-owned Irish-based bank expressed anger at the State plan.
He said his bank would be competing in the wholesale funding markets against smaller rivals who had a higher debt rating, a measure of financial strength and that they could pay more for their money because they were supported by a State guarantee.
AIB, one of the six lenders covered by the guarantee, will not have its businesses in the US or Poland covered by the guarantee, as they are not wholly-owned subsidiaries. The bank owns 25 per cent of New York State-based bank MT and 70 per cent of the Polish bank, Bank Zachodni WBK.
