The Irish government has bowed to pressure from its two biggest banks and dropped an insistence that the industry as a whole help to pay the costs involved in settling the debts of any insolvent bank.

To minimise the cost to Irish taxpayers, the original plan envisaged that where the guarantee is called upon, and the creditors repaid, any cost not recovered from the bank in trouble would be recouped from the other covered institutions “over time in a manner consistent with their long-term viability and sustainability”.