Ireland has said it will not issue a bank loan to any Irish citizen, but is expected to take a more cautious approach in the future.
The Irish Government last month announced it would introduce a limit of €25,000 in bank loans for Irish citizens, but the move was met with some concern from those in Ireland’s banking sector who feared it would limit the number of new banks available.
However, a spokesman for the Department of Finance said the Government was “committed to the development of Irish banking and is reviewing its current financial regulation regime”.
In the UK, banks have been advised not to issue loans to Irish nationals for at least two years, but that could change.
The Financial Conduct Authority (FCA) has said that for all the warnings about potential negative effects of the current financial system, it is still not clear that a blanket ban would have any impact on the UK.
However there is a view in the banking sector that the current rules could be circumvented by individuals with assets in the UK who can afford to lend, in a bid to encourage investment.
The bank has been in discussions with the FCA about the issue, the spokesman said.
“We are in the process of assessing the situation in Ireland,” he said.
“It is not appropriate to comment further at this stage.”
The spokesman said the Bank of England has not ruled out the possibility of a UK-wide limit on loans to people with Irish nationality, but it was not yet clear how it would be implemented.
“This is something we are exploring,” he added.
In addition to the UK and Ireland, countries including Japan and South Korea have imposed limits on the amount of foreign direct investment they can grant in their economies.
A similar measure was introduced in South Korea earlier this year.
“If Ireland follows through on the FCTA advice, we will work closely with the Bank to assess the impact on our banks and the wider economy,” the spokesman added.