Michael McGrath (Cork South Central, Fianna Fail)
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Question 174: To ask the Minister for Finance if he has plans to increase the State guarantee on bank deposits here; and if he will make a statement on the matter. [20746/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Before addressing the specifics of the Deputy's question, I might firstly explain that the first and most robust line of defence for depositors is a well-managed system of prudential regulation and supervision so as to minimise the risk that a Deposit Guarantee Scheme (DGS) might need to be activated. Recent assessments by reputable international bodies such as the IMF and the OECD have confirmed that the Irish system of financial regulation complies with best international practice. I might also add that Irish banks are well capitalised, liquid, profitable with strong asset quality and no material exposure to sub-prime securitisations and are thus well placed to cope with the uncertainty currently prevailing at the international level.

As regards the coverage of the current Irish DGS, the Deputy will probably be aware that it guarantees 90% of deposits with a credit institution up to a limit of €22,222, which means that the maximum payout is €20,000. This is in line with the requirements of the EU Deposit Guarantee Directive and as highlighted in the recent OECD Economic Survey of Ireland, it is in the mainstream of European law and practice and should be sufficient to provide protection to the vast majority of depositors.

The Deputy may be aware that arising from an ECOFIN Council meeting in October 2007 in the wake of the dislocation in the global financial markets, the EU has been considering possible enhancements to the EU Deposit Guarantee Directive. This review is ongoing and Ireland is participating in those discussions. I and my Department will consider the efficacy of national arrangements in the light of this to ensure that savers in Ireland benefit from safeguards in line with EU best practice.