Minister for Finance Brian Lenihan has signed an order confirming the six main Irish owned banks will be covered by the State's deposit guarantee scheme.
AIB, Anglo Irish Bank, Bank of Ireland, EBS Building Society, Irish Life & Permanent and Irish Nationwide are the banks designated by Minister for Finance.
Ulster Bank, First Active, Halifax Bank of Scotland, IIB Bank and Postbank have been invited by the Minister to participate in the Scheme and are eligible for the guarantee.
Under the terms of the scheme, if any covered institution defaults, the Minister for Finance 'will pay to the relevant creditor, on demand, an amount equal to the unpaid covered liabilities'.
The covered institutions will pay a quarterly charge to the Exchequer in return for the guarantee. The scheme lasts until September 2010.
The Minister said: 'The guarantee has as its central objective the removal of any uncertainty on the part of counterparties and customers and gives absolute comfort to depositors and investors that they have the full protection of the State'.
He said that the strict conditions accompanying the guarantee under the Scheme 'will ensure that balance sheet growth is measured and in accordance with prudent banking practice, that risk is properly measured and managed and the interest of taxpayers are safeguarded'.
The Minister went on to say he expects to make further orders shortly for the other banks eligible to avail of the Scheme.
The Financial Regulator has asked the six Irish banks covered by the State's guarantee to submit new business plans showing how they plan to reduce their risks.
The regulator has also placed 'officers' in each of the banks to scrutinise their future operations.
20 officers have been employed to be placed on-site across the banks.
Major world markets finish lower
European shares fell to their lowest close in five-and-a-half years today, with investors rattled by official data that showed that Europe's economy was plunging into a recession.
But despite the low close, major European markets recovered ground in the late afternoon after falling up to 9% earlier in the day.
The London FTSE 100 finished at 3,883 points, down 5%. New data showed today that the British economy shrank more than expected in the third quarter of 2008, and for the first time in 16 years.
In Dublin, the ISEQ fell 61 points to 2,650, with Irish Life & Permanent posting heavy losses of nearly 30%.
The Dow Jones fell 312.30 points (3.59%) to close at 8,378.95 after a volatile session.
Effects of finance crisis spread
Meanwhile, a growing list of countries have been affected by the global financial crisis in recent days.
Among those now affected by the credit crunch are: Iceland, Hungary, Pakistan, Ukraine, Serbia and Belarus which are all in discussions with the International Monetary Fund.
Capital has also flowed out of countries such as South Africa, South Korea and Argentina which yesterday announced it was nationalising its pension funds.