Ulster Bank, the Irish subsidiary of Royal Bank of Scotland, is not joining the Irish government guarantee scheme, in spite of lobbying to be included.
Ulster Bank said recent moves by the UK government “provides our parent with the protection and security they require during these unprecedented economic times”.
Ireland was forced to amend the original terms of its scheme, announced at the end of September, after the European Commission told Dublin non-Irish banks operating in Ireland should be given the option to join.
A finance ministry official said there would now be particular consternation at the decision of Ulster Bank, after Alistair Darling, the UK chancellor, had personally intervened, ringing Brian Lenihan, the Irish finance minister on the morning of the announcement to complain at the exclusion of Ulster Bank and Hbos.
Both UK banks in Ireland – as well as Danske Bank, owners of National Irish bank – have now chosen to stay outside the scheme, and thus avoid the bank levy which the government had estimated at €1bn for all 11 banks in Ireland over the two years of the scheme.
The scheme, which is aimed at restoring liquidity to the banking sector amid fears of a run on one of the banks, covers an estimated €440bn of liabilities – deposits and bank debts. The government is appointing “public interest” directors to the boards and will have a role in setting lending and funding policy.