British banks have complained that the Irish legislation enabling a guarantee for Irish banks’ deposits would distort competition.
The British Bankers’ Association will deliver a letter to the Government later today.
It says the move has put banks in other jurisdictions, especially in Northern Ireland, at a competitive disadvantage.
Meanwhile, it has been reported that Britain’s Chancellor of the Exchequer, Alistair Darling, approached the Minister for Finance, Brian Lenihan, on the legislation.
The Guardian newspaper this morning quotes the British Treasury as saying that in two phone calls the Chancellor told Mr Lenihan ‘in no uncertain terms that the scheme was a problem for the UK’.
The Treasury says Mr Darling was given a sympathetic hearing and was told that Ireland was not seeking to undermine British banks.
Alastair Darling urged Mr Lenihan to open the guarantee scheme to British banks in Ireland and Mr Lenihan indicated that he would consider it.
In the course of last night’s Dáil debate, the Minister told the House that Ulster Bank had made an application to be included in the guarantee scheme, and said the Government would give careful consideration to that application.
British bank HBOS Plc, which is due to be taken over by rival Lloyds TSB Group Plc as part of a UK government-backed bailout, said it would apply to join the scheme.
HBOS has retail and business banking operations in Ireland under the Halifax and Bank of Scotland (Ireland) brands.
Savers in Britain have been moving cash into Irish banks since the Irish guarantee scheme was first announced, as well as into British post office savings accounts which are run by the Bank of Ireland.
The British Bankers Association is writing to the Government to complain about the distortion of competition caused by the guarantee package available to Irish banks.
There is now increasing pressure on Gordon Brown to follow Ireland’s lead and guarantee all British savers’ deposits.
The move would level banking competition but in theory could cost over a trillion pounds sterling.
The prime minister is setting up an emergency cabinet committee to take charge of Britain’s response to the financial crisis.
It is thought it will be on similar lines to the British government’s crisis management committee, known as Cobra.
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