Greece joined Ireland in guaranteeing all bank deposits yesterday, heaping further pressure on other European countries to follow suit.

After the Greek Cabinet met to discuss protecting the country’s financial system, a senior Finance Ministry official told Reuters that the Government would guarantee all bank deposits “whatever the amount”, in a backstop worth an estimated €230 billion (£180 billion). Greek laws protect the first €20,000 in any bank account.

George Alogoskoufis, the Finance Minister, said that the banking system was “completely safe and solvent”. “I want to emphasise that citizens’ deposits in all the banks that operate in the country are absolutely secure,” he said. He did not, however, promise a blanket guarantee.

President Sarkozy of France will host a summit of European leaders tomorrow to discuss the global financial crisis. There has been disagreement over the best response to the worsening credit crisis. Jean-Claude Trichet, President of the European Central Bank, yesterday ruled out the possibility of a Europe-wide fund, similar to the new US model, to bail out stricken banks. The Dutch Prime Minister also said that he opposed a fund.

Ireland’s decision on Tuesday to guarantee all of its bank deposits infuriated other countries trying to deal with the financial turmoil. The British Bankers’ Association said that the guarantee had distorted competition by causing British savers to move their cash to Irish banks. “We need fair play for financial institutions across Europe,” the association said.

Pedro Solbes, the Economy Minister in Spain, said of Ireland’s move: “I think it’s a measure that creates quite a deal of irritation.”

However Mary McAleese, the Irish President, yesterday signed off legislation guaranteeing the liabilities of Irish banks. This immediately triggered inflows of cash from Britain into Irish banks – including a reported single corporate deposit of €500 million to one bank – raising questions in Brussels and London about competition and state-aid rules.

The crisis was triggered by fear of the imminent collapse of a major Irish bank, which could have triggered a domino effect. The legislation guarantees the deposits and debts of six Irish-owned banks totalling about €400 billion until September 2010.

Brian Lenihan, the Irish Finance Minister, said that applications for inclusion in the scheme from nonIrish banks with a significant retail presence in the country would be considered. HBOS, which is due to be taken over by Lloyds TSB, said that it would apply.

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