Danske, which is Denmark's biggest financial group, said today that it is going to join a two-year deposit guarantee scheme the Danish government announced last night.
Danske, which owns National Irish Bank in the Republic and Northern Bank in Northern Ireland, had applied to take part in the Irish government's bank guarantee announced last week.
But now that it has joined Denmark's scheme, Danske has withdrawn its request to join the Irish scheme.
'National Irish Bank deposit customers will be covered by the new Danish agreement,' National Irish Bank said today.
'As part of the agreement, depositors and creditors with unsecured claims are fully covered by the State guarantee regardless of the amount.'
In an interview with Reuters news agency, the bank's chief financial officer Tonny Thierry Andersen said Danske's Irish operations were affected by the financial crisis.
Andersen said: 'What we can see in Ireland is that asset values continue to fall and we are paying the consequences of that.'
Danske said it expects to be liable for around a third of the €6.6 billion fund that participating Danish banks are expected to contribute to.
Danske expects the guarantee to reduce its net fee income by about €0.3 billion per year for two years, and that its third-quarter earnings will be slightly weaker than anticipated due to the imapct of the financial crisis.
This morning Danske's shares were down 10% at 119.75 kroner, while the Copenhagen exchange's top 20 index was down 5%.
