Britain mulls matching Irish bank guarantee

LONDON (Reuters) - Britain is considering matching an Irish move to guarantee all bank deposits in response to the global credit crunch, a newspaper reported on Wednesday.

The Dublin government on Tuesday guaranteed the bank deposits of Irish banks in a bid to improve the industry's access to international funds frozen by the crisis.

The pledge, which covers up to 400 billion euros (323 billion pounds) of liabilities, is more than twice the country's annual gross domestic product.

The Daily Mail newspaper quoted unnamed government sources as saying the British government was considering a scheme that would match the Irish government's guarantee to protect all bank bonds, debts and deposits.

Calling it a "drastic emergency plan" to rescue London's financial industry, it said Prime Minister Gordon Brown had taken the unusual step of hiring investment banks to advise him on a possible bailout deal, independent of Chancellor Alistair Darling.

A spokesman for Brown declined comment.

Protection of bank deposits has become a key public concern after the government was forced to nationalise two mortgage lenders this year, Northern Rock and Bradford & Bingley.

Brown said on Tuesday the government planned to raise the guarantee for bank savings to 50,000 pounds from 35,000 pounds in a new banking law.

Asked if he would go further and copy the Irish plan, Brown told the BBC: "Let's remember that the Irish are dealing with taxpayers' money here. We have got to get what is right and also what is reasonable."