'The amount we have fixed is an amount of one billion euros over a two-year period. We are requiring the banks to pay this sum of money to us for the benefit of this particular guarantee.' Mr Lenihan said a billion euros was more than 10 per cent of the annual profits of the Irish-listed banks.

He added: 'It is more than 10 per cent of the quoted value of the Stock Exchange of these banks as well. So it is a substantial amount, a significant amount, which we are insisting upon payment of in the current climate.'

The guarantee scheme initially covered six Irish banks and then was extended to cover a further five foreign-owned banks with a substantial presence in the country.

The finance ministry estimated the total contingency liability at 485 billion euros.

Mr Lenihan said that in return for the guarantee, the government was also 'going very deep into the management and direction of these banks'. 'We are insisting on the appointment of directors on the boards of the relevant institutions, we are insisting on strict credit control arrangements, we are instituting arrangements for the control of remuneration and pay levels in the banks,' he said.

'This is a very extensive scheme involving state-direction in our banking system to ensure we have a good healthy, sound banking system in Ireland.'

Asked if heads would roll in the banks, Mr Lenihan said it was a matter for the individual institutions.

'What we are insisting on is strict and better policies in relation to lending, better policies in relation to risk assessment and strict controls over executive pay,' he said.

'What we need to do is establish a procedure that ensures that the pay levels in the bank are not related to excessive lending policies.'

A three-person independent committee appointed by the finance minister will oversee all remuneration plans of senior bank executives, including bonuses and share options.

Mr Lenihan said bonuses would be linked to 'reductions in guarantee charges, reduction in excessive risk taking and encouraging the long-term sustainability of the covered institution'. -- AFP