The announcement by the Government that it will guarantee all money saved with an Irish institution for two years has enticed overseas investors to withdraw their money fropm their own countries and put into the named Irish banks and institutions.
A Bank of Ireland spokeswoman said evidence suggested that British savers were moving cash to the bank to take advantage of the guarantee.
She said the bank was seeing a “very, very steady” increase in people contacting its call centres from the North, and it is thought the pattern is the same across the UK.
The move by our Government comes just over a week after it increased the guarantee limit for savers from €20,000 to €100,000.
Savings products at the Post Office in the UK are backed by the Bank of Ireland, meaning that savers will benefit from the Irish Government’s guarantee.
A Post Office spokeswoman said: “Since last week when the government first changed the amount that was protected, we have seen an increase [in savings customers].”
However, the Government plan has not pleased all non-Irish as it was lashed by the European Commission on Wednesday evening.
The bail-out plan was hatched and announced without consultation with the EU’s competition authorities who will have to approve the deal.
And as EU Competition Commissioner Neelie Kroes still awaited formal notification from Dublin, she pointedly praised British government co-operation with Brussels over the Bradford & Bingley bail-out and made clear her displeasure that Ireland had set up bank rescue plans without consultation.
Without directly naming Ireland, she commented: “I would like to plead with national governments today not to act unilaterally but rather to continue their practice of consulting the Commission when they are confronted with problems that may require state aid to the banking sector.
“When Europe was confronted with a banking crisis in the 1930s, governments decided to go national, to retreat from the European markets and close their borders. Protectionism was not the solution at the time, as we very well know. Let us not make the same mistake twice.”
Behind the scenes officials voiced surprise that there had been no prior consultation with Brussels by Dublin – especially considering that any deal stands or falls on EU rules.
Ms Kroes emphasised that the crucial and swift Commission endorsement of the Bradford & Bingley rescue package had been made possible by close co-operation with the UK over the last few days.
“We were in contact with the UK authorities over the weekend to provide them guidance so that they designed a solution fitting with competition rules – then we approved it within 24 hours.”
The speed was unprecedented – even last year’s urgent Northern Rock rescue package took the Commission five days to vet and approve.
UK Prime Minister Gordon Brown is also said to be angry at Dublin’s failure to consult – and final Commission approval of such a sweeping state guarantee to six major banks is far from certain.
“We’re still waiting to be notified formally about the details, and then we’ll see,” said one Commission official.
At time of going to press, The Labour Party was demanding the Government caps the salaries of bosses of the country's top banks involved in the €400bn rescue plan.
