British government confirms increase in savers guarantees
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Thu, 02 Oct 2008 13:33
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London - The British government confirmed Wednesday that it would raise to 50,000 pounds (90,000 dollars) the limit at which savers' deposits would be guaranteed, but declined to follow the example of Ireland which is planning to offer a blanket guarantee on savings. The increase of the British limit from 35,000 pounds it part of new banking legislation expected to be presented to parliament early next week. Prime Minister Gordon Brown, under pressure to give savers a "cast iron guarantee," has said he believes the increased upper limit would be sufficient to protect British savers. "Let's remember the Irish are dealing with taxpayers' money," said Brown. "We have got to get what is right and also what is reasonable," Brown told the BBC. His comments came after the Irish government announced plans to safeguard all deposits in the country's six main banks for the next two years, to the tune of 560 billion dollars. The Financial Times said Wednesday that a similar scheme in Britain would be rejected by the Bank of England as carrying an "unacceptable level of moral hazard."The Irish decision had also enraged European officials and could fall foul of the European Commission's rule on state aid by offering competitive advantage to Irish banks, said the FT.
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