(BRUSSELS) - The European Commission welcomed on Monday a revised Irish scheme to guarantee bank deposits, after an initial plan early this month to cover local banks angered Dublin's European neighbours.

"The European Commission welcomes the various changes and commitments made and the close cooperation with the Irish authorities over the last week," the European Union's executive body said in a statement.

It said the new plan addressed issues of concern raised by Brussels "relating to the maintenance of the integrity of the single market in financial services and compliance with EU state aid principles."

But the commission witheld its final verdict, saying it would "urgently" adopt a decision on whether the scheme falls within Europe's state aid rules.

Ireland's unilateral six-bank deposit guarantee plan early this month was slammed by European countries as a decision that would distort competition, with German Chancellor Angela Merkel describing it as "unacceptable."

Since then, however, countries including Austria, Denmark, Germany, Greece and Portugal have taken similar decisions, while others such as Britain have raised the amount of personal deposits they guarantee.

On Thursday, to assuage some of the anger, Ireland extended its blanket guarantee on bank deposits to five foreign-owned banks.

Apart from not discriminating against a bank's country of origin, the new scheme contains a pricing mechanism covering the plan's costs and appropriate safeguards to limit abuse of it.

Irish Prime Minister Brian Cowen said in a statement that the "modifications agreed with the commission do not alter the basic parameters of the scheme as announced".

"The Irish government took decisive and effective action when it announced its bank guarantee scheme to provide stability to the financial market in Ireland when it was needed.

"I very much welcome that following detailed discussion with the commission the scheme is now in compliance with EU requirements."

Cowen said that arrangements agreed at the summit of European leaders in Paris on Sunday "do not impinge on the government's guarantee scheme and I welcome my colleagues' confirmation of this".

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