October 7, 2008 / 11:28 AM / 11 years ago

UPDATE 1-Irish PM says will work with EU on bank plan

(Adds more comment, detail)

By Jonathan Saul

DUBLIN, Oct 7 (Reuters) - Ireland will work with European Union partners over any perceived problems with its 400 billion euro ($543.6 billion) bank guarantee plan, Prime Minister Brian Cowen said on Tuesday.

The Irish government announced last week it would guarantee the deposits and debts of six Irish-owned banks for the next two years in a bid to shore up confidence in the country’s financial system.

The scheme has already triggered inflows of cash into Irish banks from neighbouring Britain, angering many there who say the move is anti-competitive.

“We are obviously anxious to work with partners to see in what way we can move the matter forward,” Cowen told reporters on the sidelines of a business forum in Dublin.

“The moves made last week by government were essential, were in the national interest and any issues (that arise) thereafter we are prepared to discuss,” he said.

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.

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

“We have indicated and made provision in the legislation for the possibility that banks other than the six that are originally mentioned being accommodated in some way,” Cowen said.

“We are prepared to look at these questions and consider them very carefully, but also to make the point that the state would not be in a position to take on an inordinate risk,” he added.

Details of the scheme are expected to be presented to Irish deputies in the coming days, a finance ministry spokesman said.

EU competition chief Neelie Kroes said on Monday the Irish proposals could be tweaked to make them acceptable.

The Irish Independent newspaper, without citing sources, said on Tuesday the guarantee to the six Irish banks could be restricted to their Republic of Ireland operations without covering foreign activities in a bid to get the scheme past EU competition rules. The finance ministry spokesman declined to comment on the report.

Editing by Stephen Nisbet

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