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Commenting on the announcement the Minister stated:
"After this date, no new liabilities will be guaranteed under the Scheme. The ending of the ELG for new liabilities after the 28th of March 2013 marks a significant step in the normalisation of our banking system. It is important to stress that today’s announcement will not impact the vast majority of bank customers as their deposits are covered by the Deposit Guarantee Scheme or DGS – a separate guarantee which has been in operation in Ireland since 1995 and is part of an EU-wide arrangement for deposit protection.
The Government’s banking policy is a series of steps, all of which are interlinked:
The completion of independent Stress Tests of the banks’ capital needs in March 2011. These stress tests led to the private sector investment of €1.7 billion in Bank of Ireland in July 2011. The robustness of these stress tests has also allowed the banks to increase their deposits and access to international funding markets.
The assistance of those in Mortgage Arrears has been advanced through the new Personal Insolvency Regime in 2012 and complemented by the Mortgage Arrears Resolution Strategies being overseen by the Central Bank. The involvement of the Central Bank ensures that they apply to all banks whether State owned or not. The resolution of mortgage arrears is essential to alleviate the mortgage difficulties and ensuring that the banking system is not constraining economic activity.
The removal of the banks in wind down (IBRC) from the Irish banking system reduces their drag on the economy and the cost of funds for Ireland. The liquidation of IBRC earlier this month removes the legacy of the worst excesses of the boom. The exchange of the promissory notes for long term Government bonds has been acknowledged by all analysts as the achievement of the best possible outcome for Ireland.
The creation of a cost effective banking system with customer service at its core. The Government is working to ensure that the banks have reduced their cost bases so as they can offer credit at as low a cost as possible, taking account of funding conditions, to their customers. This customer focus is vital in ensuring that the core banks continue to ramp up their SME lending and mortgage lending, both of which increased in 2012.
The work on improving the cost base of the banks is vital for their return to long term profitability. This return to profitability will be assisted by the shortly to be completed Mercer review of remuneration, which will ensure a full and proper assessment of this significant cost.
The success of the State’s bond issuances has played an important role in improving the cost bases of the banks. The State’s success in accessing bond markets has allowed the banks to raise international funding at lower levels than previously. This feeds directly into the competitiveness of our economy as the cheaper credit is to businesses, the more internationally competitive they are.
In tandem with our European partners, the Government continues to advance the implementation of the decision taken on the 29th of June 2012 to break the negative link between banks and sovereigns across Europe."
Notice from the Minister for Finance