The Irish government is to take over the troubled Anglo Irish Bank, it was announced last night.
The state had moved to plough 1.5 billion euro (£1.4 billion) into the bank, which has lost four top executives over a secret loans fiasco.
But the Department of Finance said recapitalisation was not the way to secure its future.
It said its funding position had been weakened and unacceptable practices – including the 87 million euro (£79 million) loans controversy – had caused serious damage to its reputation.
“The funding position of the bank has weakened and unacceptable practices that took place within it have caused serious reputational damage to the bank at a time when overall market sentiment towards it was negative,” a statement said.
“Accordingly, the Government believes that the recapitalisation is not now the appropriate and effective means to secure its continued viability.
“Therefore the Government must move to the final and decisive step of public ownership.”
What does this mean for savers with the bank?
The Anglo Irish Bank will continue to operate as previously but is now a state-owned bank.
As the Irish Deposit Protection Scheme exceeds the level of protection offered by the Financial Services Compensation Scheme (FSCS), Anglo Irish and the other Irish banks are no longer permitted to be members of the UK scheme. UK depositors in Anglo Irish must therefore depend solely on the Irish protection scheme.
Since September 2008, the Irish government has guaranteed 100% of Irish and UK depositors’ money in its banks, so if an Irish bank collapses, you will get all your money back as long as the Irish Deposit Protection Scheme is in a position to pay deposit guarantees.
Which? has only included those banks that are fully covered by the FSCS in our savings Best Buys since October 2008, so the Irish banks have been excluded.
Visit our guide on protecting your savings for further information.
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