Government Move May Drive Up Bank Charges

Today's unprecedented move by the Irish Government to put €400 billion of taxpayers money up as a guarantee for Irish banks, may have had unforeseen consequences in the form of spiralling bank charges.

Reports this morning (Thursday) have revealed banks are poised to increase credit card rates, current account charges and overdraft costs.

The decision to guarantee the banks assets was made after frantic lobbying by the major financial institutions.

Brian Lenihan, the Finance Minister, claimed yesterday the move was necessary to avoid the collapse of one of Ireland's biggest banks, possibly leading to further collapses, but the guarantee was made with the stipulation that banks would return monies borrowed - with a profit - to the taxpayer.

However, the news shows that banks are now planning to pass this extra cost back onto the people who are supposed to benefit.

The guarantee has also caused a widespread reaction rippling almost worldwide.

It has emerged today that Mr Lenihan was contacted twice on Wednesday by the British Chancellor of the Exchequer Alistair Darling, as the Bill was being formulated.

The British government is understood to be 'furious' over the Bill which has led to an as yet untold amount of money draining from the 'unprotected' British banks into the Irish institutions.

Banking chiefs in Britain are said to have also reacted furiously to the Government's guarantee plan, claiming that the scheme is unfair and distorts competition.

According a report in The Guardian, Mr Darling is said to have told Mr Lenihan yesterday that "the scheme was a problem for the UK" and called on the Minister for Finance to offer the guarantee to British banks operating in the country too.

(DW)