Minister for Finance Brian Lenihan TD addresses the Michael Collins Commemoration at Béal na mBláth, West Cork, Aug 22, 2010.

The Minister for Finance, Brian Lenihan, TD today announced that the State bank guarantee for short term bank liabilities, including corporate and interbank deposits as well as debt securities would be extended from its current expiry date of September 29 2010 to 31 December 2010.

The Department of Finance said a State guarantee will therefore be available for both short- and long-term liabilities up to the end of the year. It said this is an important support to the Irish banking system facilitating their access to both short- and longer-term funding to help maintain the overall stability of the banking sector and complements the broad Government Strategy to restore fully the banking system and maximise its contribution to overall economic recovery.

In the aftermath of the collapse of US investment bank Lehman Brothers, Ireland and Denmark were the only countries to guarantee existing bank debt.

This Department added that the modification to the guarantee was recommended to the Minister by both the Governor of the Central Bank, the Financial Regulator and the NTMA. The Department will be liaising with the European Central Bank on this measure and an approval by the European Commission under the State aid rules needs to be secured before the guarantee can be extended.

Following Monday's meeting between Minister Lenihan and Commissioner Almunia in Brussels, Lenihan said he is satisfied that Almunia is aware of the Irish situation. It is intended that some technical details relating to the implementation of this modification will be agreed with the European Commission in coming days.

The Minister said that this announcement does not affect retail deposits of up to €100,000 as these deposits continue to be guaranteed under the ordinary Deposit Guarantee Scheme, which is not time limited