The European Commission has approved the extension of the Irish government’s bank guarantee scheme in respect of short term liabilities until the end of this year. The extension had previously been recommended by the Central Bank, the Financial Regulator and the National Treasury Management Agency, and had also been called for by Anglo Irish Bank and AIB.

The guarantee, which covers corporate and interbank deposits as well as debt securities, was originally due to expire on the 29 September 2010. Long term debt and long term deposits are already covered until December 2010. The guarantee will continue to cover the original six participating institutions. However, Bank of Ireland has made its intentions to disengage from the scheme known to the market.