BRITISH BUSINESSES:THE GOVERNMENT'S pledge to guarantee the State's banking system triggered a flood of cash from UK businesses to Irish banks, a senior stockbroker said yesterday.
"My information is that two Irish banks saw very significant inflows from the UK corporate sector," said the stockbroker, who asked not to be named.
"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.
AIB and Bank of Ireland, the two biggest banks by market share, declined to comment.
The move, which does not extend to British banks operating in the country, had ruffled feathers in the UK and Brussels, the stockbroking source said.
Asked whether Britain would object to British banks being left out of the Irish protection plan, a spokesman for British prime minister Gordon Brown said: "We are in close contact with our Irish colleagues and EU partners on the details of this." Mr Brown suggested that Britain, which plans to raise protection for savers to £50,000 from £35,000, had no plans to copy the Irish measure.
"Let's remember that the Irish are dealing with taxpayers' money. We have got to get what is right and also what is reasonable," he said, when asked whether he would follow the Government.
Mr Brown said he was confident that Lloyds TSB's $17.8 billion takeover of HBOS would go through after speaking to the parties involved today.
"At the end of the day, it is a matter for the shareholders. I'm pretty confident that both parties want to go forward."
HBOS dropped 14 per cent yesterday in London on speculation that the purchase may not go ahead on the terms which were set on September 17th as financial market turmoil trims the value of the Edinburgh-based lender.
- (Bloomberg)