Merkel slams Ireland over bank guarantees

BERLIN: German Chancellor Angela Merkel criticised Ireland's unilateral move to protect its banks as "unacceptable" Tuesday, saying Dublin had not gone about the decision in the right way.

"The Irish way is not the right way," Merkel said in a keenly awaited address to parliament on the financial crisis.

"Protecting without coordination one's own banks, without including other international institutions that paid taxes in Ireland for years, and thereby of course hurting competition, is in my opinion unacceptable."

Ireland pledged a blanket guarantee on personal and corporate bank deposits at its six major banks last week despite protests by neighbours that it would distort competition.

In Dublin, Irish Prime Minister Brian Cowen's office declined to comment on Merkel's remarks.

Germany and other countries have said they would guarantee only personal savings and current accounts to prevent a rush of people withdrawing money because of fears that a bank could fold.

The comments came as European finance ministers agreed in Luxembourg on Tuesday to increase such minimum bank deposit guarantees in Europe to 50,000 euros (67,500 dollars) from 20,000 euros currently.

Guaranteeing private deposits is aimed at preventing a rush of people seeking to withdraw all their money from banks because of fears that the bank could fold.

A government spokesman said Tuesday that Merkel's weekend announcement for a guarantee for all savings in Germany had achieved its aim of soothing people's worries about their money not being safe.

"We think that with this guarantee ... the objective is being fulfilled, namely a calming of the situation," government spokesman Thomas Steg told a regular news conference.