The announcement that the Eligible Liabilities Guarantee (ELG) Scheme will end at midnight on 28th March 2013 is a welcome development but should not be interpreted as meaning that the Irish banking system is fixed or functioning in a normal way, according to Fianna Fáil Finance Spokesperson Michael McGrath.
Deputy McGrath stated, “The ending of the ELG scheme is a necessary step towards normalising the banking system. In recent months, the Irish banks have managed to successfully raise funds outside of the guarantee scheme and deposit levels have stabilised. Since its introduction, the ELG scheme has played an important role in ensuring affordable access to funding for the banks and has yielded around €1 billion a year for the exchequer by way of fees from the participating banks.
“Following the ending of the ELG scheme, a number of critically important challenges will remain for the Irish banking system. The Irish public will rightly expect the banks to reasonably meet the credit needs of personal and business customers. The banks must for once and for all get on top of the mortgage arrears and personal indebtedness crisis by putting sustainable long term solutions in place. The capital stress tests later in the year will be another milestone for the banks.
“The ending of the ELG scheme will bring into focus the government’s strategy for dealing with its stakes in the banks. In particular, the opportunity afforded by the establishment of the European Stability Mechanism will need to be fully exploited. The government must seek the full implementation of the June summit agreement which agreed to break the link between the sovereign and the bank debt.
“Overall, the ending of the ELG scheme is a positive development and must be welcomed. Corporate and personal depositors should be made aware that, following the ending of the ELG, the Deposit Guarantee Scheme will continue to guarantee the first €100,000 placed in each participating institution.”