Anglo Irish says guarantee plan should not cripple banks

By Jonathan Saul

DUBLIN (Reuters) - The rate that Irish banks will pay under the government's plan to guarantee 400 billion euros (312 billion pounds) in liabilities should not cripple institutions, Anglo Irish Bank Chairman Sean FitzPatrick said on Saturday.

The plan, which guarantees the deposits and debts of six Irish-owned banks for the next two years, was unveiled on Tuesday in the wake of a panic-stricken day for Irish financial stocks, and passed into Irish law on Thursday.

Ireland's central bank chief John Hurley said on Friday details of the scheme, which has led to inflows of cash from Britain into Irish banks, were being finalised over the weekend. The specific details are expected to be presented to the government next week.

"Everyone has got to be reasonable in this," FitzPatrick told public broadcaster RTE on Saturday.

"The banks should pay for it, but they should not be crippled in what they are asked to pay either. The cure should not be worse than the ailment," he said in an interview.

Hurley said the scheme, designed to shore up confidence in Ireland's financial system, would be developed in such a way as to charge a commercial rate for the benefit of the state guarantee.

Irish media said it was understood that banks would enter into individual contracts with the government to be covered under the scheme.

Without citing sources, the Irish Times said on Saturday the government and the central bank would seek up to 2 billion euros in charges from Irish institutions covered under the scheme.