UK-OWNED bank Halifax-Bank of Scotland (Ireland) has opted not to join the Government's bank guarantee scheme.
Halifax chief executive Mark Duffy described the guarantee as "discriminatory" and "a completely disproportionate solution", saying it would reduce the bank's "competitive edge" if it joined the scheme.
Halifax was one of five foreign-owned Irish banks which sought to join the scheme after it was unveiled last month. However, the UK has since agreed to guarantee Halifax's parent bank, HBOS, and strengthen the bank with a £13 billion injection of taxpayers' money.
Halifax said it did "not need to participate in two schemes", adding that the State's guarantee would "restrict the bank's ability to compete and provide value for money products for business and retail customers during these difficult times".
Mr Duffy said: "While the scheme has its merits - and it may suit some of our competitors to join - from our strong financial position it doesn't suit us and as currently presented it would ultimately prevent our ability to offer a better deal for our customers."
The UK bank guarantee permits Halifax to lend up to 2007 levels.
The Irish scheme does not stipulate a limit, though it says the Minister can impose specific restrictions to prevent an "unwarranted expansion" of lending activity.
Mr Duffy said: "We see a competitive advantage not being in it."
Halifax's decision will pressure UK-owned Ulster Bank to consider following suit. Ulster Bank is thought to be pondering a similar move, although a spokeswoman said it was progressing with its application to join.
The four remaining foreign-owned banks which have applied to join have until the end of this week to sign up to the guarantee.
One of the banks, Belgian-owned IIB Bank, is also considering whether to join the scheme.
Several banks have expressed concern about a clause in the Irish scheme which states that all covered banks would have to pay the State's cost if one bank failed.
However, the Government appeared to ease this rule last week, saying guaranteed banks would not have to cover this cost.
Bank shares fell again yesterday. Irish Life Permanent succumbed to three days of steep share price falls and disclosed - two weeks before planned - that it was owed €74 million by three Icelandic banks which have been seized by the Nordic state. Its share price fell 3 per cent.
Anglo Irish Bank, a heavy property lender, fell 19.9 per cent after rival National Irish Bank said it incurred a bad debt charge of €69 million in the third quarter of this year primarily on losses to the building sector.
