Irish bank pledge nets cash inflow from UK-source

By Kevin Smith

DUBLIN (Reuters) - The Irish government's pledge on Tuesday to guarantee the country's banking system triggered a flood of cash from UK businesses to Irish banks, a senior Irish stockbroker said.

"My information is that two Irish banks saw very significant inflows from the UK corporate sector," the stockbroker, who asked not to be named, told Reuters.

"My guess is it continued through the day, and if it happened at two banks there's no reason why it shouldn't have happened at all of them."

The stockbroker did not put a figure on the inflows.

Allied Irish Banks and Bank of Ireland, the country's two biggest banks by market share, declined to comment when contacted by Reuters on Tuesday.

Earlier, Ireland pledged more than double its gross domestic product to guarantee the deposits and debts of domestic banks in a radical move to improve bank access to international funds frozen by the global credit crunch.

The guarantee, which covers up to 400 billion euros (316.8 billion pounds) of liabilities including retail, commercial and interbank deposits, takes effect immediately and expires in September 2010.

The move followed dramatic falls in Irish banking stocks on Monday -- with Anglo Irish Bank's share price dropping by nearly 50 percent -- that had sparked fears of meltdown.