THE MINISTER FOR FINANCE has welcomed the decision by the European Commission to approve a proposed extension of the government’s bank guarantee scheme until the end of next June.

The guarantee, which originally would have expired on September 30 last, has already been extended until the end of next year, but required approval from Brussels in order to be enacted, as it theoretically gives Irish banks a competitive advantage over those of other states.

The extension to June 30, as opposed to December 31 of next year, is the maximum allowed under the Commission’s policy on guarantee schemes.

Finance minister Brian Lenihan welcomed the approval, saying it would “underpin the Government’s efforts to restore the financial system and support the funding position of the participating institutions in the Guarantee scheme”.

Lenihan added that the government was “determined to rebuild consumer and investor confidence in our financial system which has an important role to play in ensuring businesses, and notably SMEs, can invest for growth.”

The extension covers all deposits in Irish-owned banks, as well as the short-term and long-term liabilities of those banks. All deposits under €100,000 are guaranteed by a separate scheme irrespective of the current ‘emergency’ measure.

The extension – which covers AIB, Anglo Irish Bank, EBS, Bank of Ireland, Irish Life and Permanent, Irish Nationwide and ICS – was expected after the European Central Bank issued a legal opinion last week which endorsed the extension on the grounds it would help to introduce stability.