EU approves revised Irish support scheme for financial institutions

BRUSSELS, Oct. 14 (Xinhua) -- The European Union (EU) approved Tuesday a revised Irish scheme to provide guarantees on deposits and debt to eligible banks active on the Irish market.

The European Commission said the revised scheme is compatible with EU state aid rules because it was an appropriate means to remedy a serious disturbance in the Irish economy while avoiding unnecessary distortions of competition.

After revision, the scheme now provides for non-discriminatory access to banks with systemic relevance for the Irish economy, regardless of their origin, and the guarantee is limited in time and contains appropriate safeguards to avoid abuses.

Ireland was the first EU country to provide banking guarantee in face of escalating financial crisis, but a previous plan aroused uproar in the EU because it covered all bank deposits and inter-bank lending only for six Irish-based banks.

Britain and others were concerned that this would attract money away from their national banks to Irish rivals. Under EU pressure, Ireland agreed to cover major foreign-based banks operating in the country.

In a coordinated bid to calm savers' concern about their money in struggling banks, EU finance ministers hammered out a deal last week to increase the EU-wide minimum deposit guarantee which member states must offer savers from 20,000 euros (about 27,000 U.S. dollars) to at least 50,000 euros.

"This case illustrates how we can work together with member states to design measures that help to solve the financial crisis while avoiding negative effects on other member states' banks," said EU Competition Commissioner Neelie Kroes. (1 U.S. dollar = 0.7407 euro)