Bloomberg News

Irish Life & Permanent's Casey Says Guarantee Not a Subsidy

October 01, 2008

Irish Life & Permanent Plc (IPM) Chief Executive Officer Denis Casey comments on the government's decision to guarantee the deposits and borrowings of six lenders. The guarantee will last until Sept. 28, 2010, and is being provided at a charge to the banks.

He was speaking in an interview with Irish state broadcaster RTE today.

On the guarantee:

``The government has made it crystal clear that this is not a subsidy to the Irish banking system. We can borrow more cheaply now because we have the benefit of an Irish government guarantee. The difference between that lower cost and our normal borrowing cost will be paid to the Irish exchequer and to the Irish taxpayer.''

On benefit to Ireland:

``This will bring stability to the Irish banking system, which will bring stability to the Irish economy.''

On risk to taxpayers:

``The Irish taxpayer is not going to be exposed in this. We will pay the Irish taxpayer for the privilege of using Ireland's balance sheet to allow us to borrow internationally and the capital which is in banks, the equity capital, will absorb any losses which arise in our normal course of business lending.''

On extent of guarantee:

``The government hasn't guaranteed corporate loans or any large property loans that Irish banks may have lent. To the extent that during an economic cycle banks incur losses in those loans they will continue to be incurred the banks and the shareholders in the banks.''

To contact the reporter on this story: Ian Guider in Dublin at iguider@bloomberg.net.

To contact the editor responsible for this story: Mike Anderson at manderson34@bloomberg.net.


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