New bank levy being considered by Government
The Government is considering a new levy on the country's banks in Tuesday's Budget to replace fees the banks used to pay under the recently cancelled deposit guarantee scheme.
Allied Irish Banks, Bank of Ireland and Permanent TSB sehlled out as much as €430m a year to the Exchequer under the deposit guarantee scheme until the guarantee was allowed to lapse to help speed the lenders' return to profitability.
The cancellation means there is a hole in the Government’s finances because banks no longer have to pay for the guarantee even though the lenders benefit from the assumption within the markets that the State would step in again if our banks ran into trouble.
The new measure could delay the banks’ return to profitability. State-owned AIB said in July that it expects to make a profit in 2014 for the first time since the bank was bailed out by tax payers at a cost of over €20bn. Bank of Ireland is also expected to start reporting profits.
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