The Irish Government has calmed concerns over the country's four biggest banks by guaranteeing all deposits, covered bonds, senior debt and dated subordinated debt for two years, responding to yesterday's 12.7% fall on the Irish Stock Exchange, the worst decline in its history.

The guarantee refers to Allied Irish Bank, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent. Anglo Irish shares fell more than 45% at one stage yesterday, while Permanent dropped more than 30%.