EU approves Govt's bank guarantee

The EU Commission has approved the Government's €400bn guarantee that covers six Irish-owned banks and five foreign-owned financial institutions. The announcement came as Taoiseach Brian Cowen returned from Paris where EU leaders had agreed on a big funding programme for banks and businesses. Under the programme governments can use taxpayers' funds to put new capital into the banks, either by buying bank shares or debt instruments issued by the banks. It is the biggest move yet by European countries to mount a co-ordinated, system-wide effort to beat the credit crisis and Eurozone countries have agreed that they can do virtually anything to prevent bank failures. Countries can now invest in bank equity to improve tier one capital rations and can buy up, insure or guarantee debt instruments issued by banks. Eurozone countries... [read full story]