DETAILS OF the Government's bank guarantee scheme are expected to be finalised at a special meeting of the Cabinet this evening which will be briefed by the Minister for Finance, Brian Lenihan, on his return from a meeting of EU finance ministers in Luxembourg.
The Cabinet will hold its regular weekly meeting in the morning, and will convene again at 7pm when Mr Lenihan has returned from the two-day Luxembourg meeting at which he has been defending his Government's action to EU colleagues.
Despite the imminent finalisation of the scheme, Irish bank shares fell yesterday in another severe sell-off on world markets as fears of global recession resurfaced. US stock markets slid more than 6 per cent, with the Dow Jones falling to its lowest level in almost five years.
Irish shares lost €5 billion in value during heavy trading yesterday, with the Iseq index losing 9.9 per cent.
Shares in the four public Irish banks fell for the first time since the Government's €400 billion guarantee was unveiled last Tuesday.
Trading in financial stocks was suspended in Iceland, and Europe experienced its worst share decline since the October 1987 crash.
The final shape of the scheme to underpin the Irish banking system is expected to be signed off by the Cabinet.
A Department of Finance spokesman said it was hoped the scheme would be ready to present to the Dáil this week.
Tensions have emerged among the guaranteed institutions over concerns that lenders with greater exposures to the deteriorating commercial property market pay a higher charge under the scheme.
A meeting of senior bankers representing each lender became heated last Thursday in discussions on how much each lender would pay.
The Taoiseach yesterday rejected criticism of the scheme from some other EU states, saying the Government had to "defend the stability of our own financial system".
He expressed a wish that a way could be found at wider European and global levels to resolve the banking crisis.
Ministers were taking satisfaction that after initial criticism from some EU countries, including German chancellor Angela Merkel, there was now a wide acknowledgement that the Government's action was justified.
Sources pointed to the statement made yesterday on behalf of the EU presidency by French president Nicolas Sarkozy, who said: "Each government will operate with its own methods and means but in a co-ordinated manner."
The German, Danish and Belgian governments yesterday stepped in to support financial institutions.
EU competition commissioner Neelie Kroes, after her earlier criticism of the Irish guarantee, suggested it could pass scrutiny with "some fine-tuning".
"Some concerns have been raised about the scope of the measure," Ms Kroes told a European Parliament committee in Brussels, referring to the issue of discrimination between different banks operating in Ireland.
Employers' group Ibec warned yesterday that unless further corrective action was taken to stabilise the State's public finances Ireland's reputation in the international investment community would be damaged.