Irish fin min: looking at UK banks in guarantee plan

DUBLIN (Reuters) - Ireland will examine the position of UK banks trading in the country amid a government plan to guarantee 400 billion euros ($550 billion) in Irish bank liabilities, Finance Minister Brian Lenihan said in an interview.

The plan, which guarantees the deposits and debts of six Irish-owned banks for the next two years, was unveiled on Tuesday in the wake of a panic-stricken day for Irish financial stocks, and passed into Irish law Thursday. The scheme has already triggered flows of cash from neighbouring Britain into Irish banks, angering many there who say the move is anti-competitive.

The Irish government has said it may extend the scheme to foreign banks with retail units in Ireland and that applications would be considered on a case-by-case basis.

Lenihan said in an interview with Ireland's Sunday Independent newspaper he had spoken with British finance minister Alistair Darling twice during the week.

"The United Kingdom government are concerned about how this (scheme) may impact on certain UK institutions and we have told them we will address those issues, but we had to look after our own six domestic banks first," Lenihan said.

Ulster Bank Group, part of Royal Bank of Scotland Group Plc, and British bank HBOS Plc are among the institutions that have requested inclusion in the scheme.

"Certainly we will look at the position of the United Kingdom banks who trade here and are subject to our regulation," Lenihan said in the interview, which took place Friday.

Lenihan said he had agreed to look in particular at the position of Ulster Bank.

Leaders of Europe's four biggest economies -- Germany, Britain, France and Italy -- pledged Saturday at a summit to coordinate national efforts to shore up banks, protect savers and regulate markets.

He said a director representing a "public interest dimension" would be appointed to each bank's board.

"The state is now involved in the banks in this relationship and that has been made clear to the banks," he said.

Ireland's central bank chief John Hurley said Friday every effort was being made to deal with competitive issues under the scheme, which was being finalised over the weekend and designed to shore up confidence in Ireland's financial system.

Media reports Sunday said banks could pay between 500 million to 700 million euros per year to be covered under the two-year scheme. The finance ministry declined to comment.

Media also reported Sunday over 10 billion euros of funds had flowed into Ireland after the government announced the scheme. Ireland's central bank declined to comment.

(Reporting by Jonathan Saul; Editing by Dominic Evans)