UPDATE 1-Irish banks paying under 3 pct for emergency cash-paper

Tue Feb 8, 2011 6:21am EST

Related Topics

* Paper says loans typically over maximum seven days

* Says rate is half of bailout interest Ireland is paying

* Cbank declines comment on details of emergency funding

(Adds Irish Central Bank comment)

DUBLIN, Feb 8 (Reuters) - Irish banks are being charged less than 3 percent interest on emergency short-terms funds they are receiving from the European Central Bank via the Central Bank of Ireland, the Irish Independent newspaper reported on Tuesday.

The newspaper said the rate on the emergency assistance, which totalled just over 51 billion euros up to the end of last year, was about half the 5.8 percent the Irish state is paying the EU and IMF for longer-term funds under its 85 billion euro bailout.

More than a third of that bailout package was ringfenced for the country's banking sector, driven close to collapse by a steep rise in bad loan exposure to a crippled property market.

The newspaper cited several sources as saying that the government had explicitly guaranteed the short-term loans to the banks, known as the emergency liquidity assistance and typically over a maximum of seven days.

The emergency cash comes from the ECB but is allocated by the Central Bank of Ireland.

A spokeswoman for the Irish Central Bank said it would not comment on details.

"The Central Bank of Ireland can supply exceptional liquidity assistance to institutions when that is judged necessary," she said. "This facility is not part of regular monetary policy operations."

(Reporting by Kate Holton; Editing by John Stonestreet)

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