Irish Finance Minister Brian Lenihan may admit the Ulster Bank, and possibly the Halifax as well, into the Republic’s €400bn bailout scheme for financial institutions.

Last night reports emerged of a flood of Northern Ireland customers seeking to transfer their money to banks already underwritten by the Republic’s borrowing guarantee.

The latest move by the Irish government would open the door for more banks in Northern Ireland to be covered by the scheme.

The decision to extend the guarantee to more financial instutions came after lobbying from banks, pressure from the Irish opposition and anger from the British Government.

Prime Minister Gordon Brown has contacted Taoiseach Brian Cowen directly to complain about the Dublin government’s banks guarantee.

On the plus side, French President Nicolas Sarkozy says he “understands” the Irish government’s actions.

Following demands for non-Irish owned banks with a major retail presence in the Republic — such as Ulster Bank — to be admitted, Minister Lenihan indicated he would consider individual applications and measure them on their merit.

Intense negotiations were under way throughout yesterday in Dublin’s Department of Finance and a spokesman confirmed an outcome last night.

“The Minister has indicated that he will consider applications to join the guarantee scheme from financial subsidiaries with a significant high street retail presence here. These will be considered on a case by case basis,” the Department of Finance spokesman said.

Ulster Bank has sought to be included in the scheme and falls under the definition of “financial subsidiaries with a significant high street retail presence”, as it is a subsidiary of Royal Bank of Scotland and has 280 branches in Ireland, north and south.

Halifax had not applied to be admitted but would also appear to qualify, as it has 43 branches and is a subsidiary of Halifax Bank of Scotland, which is being taken over by Lloyds TSB.

But National Irish Bank is a |division of the Danish Danske Bank — which also owns Northern Bank — rather than a subsidiary, although it does have a retail |presence.

Rabo Direct and ACC are subsidiaries of the Dutch Rabobank, but fall down on the major retail presence criteria.

We did what we had to do

Aside from the impact on British-owned banks operating in the Republic and the advantage to Irish banks with branches in Britain, the British Government was also placed under greater pressure to follow the Irish move.

But Mr Cowen told Mr Brown: “We did what we had to do.”

Minister Lenihan also spoke with Chancellor of the Exchequer, Alastair Darling.

In Britain, there are reports of some Irish banks being inundated with calls from customers asking to transfer their cash to Irish branches. Savers in Irish banks in Britain will also be protected by the deal.

Of the six banks covered by the deal, Allied Irish Bank, Anglo Irish Bank and Bank of Ireland all have branches in Britain.

Mr Cowen said the French President Nicolas Sarkozy “understands” the plan to guarantee banks’ deposits and borrowings.

“I think the President understands precisely why the Irish government had to act and the circumstances in which we found ourselves,” he said after a meeting with Mr Sarkozy.

France holds the rotating six-month presidency of the EU and is reported to be considering a similar move.

But Mr Cowen admitted Mr Brown expressed some concern about the measures.

“I think Prime Minister Brown obviously is reflecting some concerns that are being raised by banks in Ireland that are not incorporated in the State,” he hedged.

The British Bankers’ Association said the move put banks not covered by the move, particularly those based in Northern Ireland, “at a competitive disadvantage”.

“While we support proposals aimed at re-reintroducing stability to the financial markets, we need fair play for financial institutions across Europe,” the BBA said.

The new laws to enable the State guarantees to take effect were being pushed through the Dail and Seanad late last night, amid demands for greater detail on the plan.