Irish banks to pay cash for guarantee, says minister

 Irish banks will have to stump up a substantial sum of cash to be covered under the country's guarantee scheme, Finance Minister Brian Lenihan said on Wednesday.

The Irish scheme had initially guaranteed 400 billion euros ($546 billion) in liabilities for six Irish-owned banks, but the European Commission approved on Monday a revised 485 billion euro Irish bank guarantee scheme that included foreign-owned banks with significant operations in the country.

"We are looking for cash from our banks and we will get a substantial sum of cash in return for the guarantee we have given them," Lenihan told public broadcaster RTE on Wednesday.

Details of the scheme are expected to be released in the coming days.

Lenihan told RTE late on Tuesday banks faced a charge of "more than 10 percent of their profits", without giving further details.

Lenihan said the government had not ruled out taking equity stakes in banks, but had no immediate plans to do so.

"Britain, America and Germany have all bailed out banks and spent an awful lot of taxpayers' money on them. We haven't — all we have given is a guarantee," he said.

"We want to maintain that position. We want to protect the taxpayer at all stages."

Ireland's financial regulator chief Patrick Neary told a parliamentary committee meeting earlier on Tuesday that he did not rule out the banks raising capital and the state getting involved.

"It is hard to see too much good news for the Irish banks and this will certainly not deflect from the continuing worries about the capital ratios in the medium term," broker NCB said in a research note.

"We remain cautious on the sector as we expect bad debt charges to increase sharply, which means capital raising appears inevitable."