The Irish government is to nationalise the Anglo Irish Bank.
Initially the Irish state was to offer a €1.5 billion (£1.4 billion) recapitalisation package to the bank, but government stepped into after a run from depositors on the bank, despite Irish guarantees of up to €100,000 on savings.
Thousands of UK savers are affected as the bank saw a massive inflow of funds from Britain last year after the guarantee was established and fears over the stability of banks grew.
Irish finance minister Brian Lenihan explained the move was taken as the bank's viability was "of systemic importance to Ireland".
"Anglo has a balance sheet of some €100 billion with a substantial deposit base which the state is determined to safeguard," he said.
He added savers should not be concerned about their deposits.
"All customers of Anglo Irish Bank can be assured that the full amount of their deposits and savings are further safeguarded by this action," the minster said.
"They can also be assured that they can and should continue transacting with Anglo as normal and there is no need for customers to take any steps as a result of this announcement.
"Anglo Irish Bank will communicate directly with all customers in the coming days."
A statement from the bank itself read: "Anglo Irish Bank will continue to trade normally as a going concern and accordingly customers and providers of funding can be fully assured of the safety of their deposits and investments, which remain state guaranteed.
"The government has confirmed that all employees remain employees of the bank."
Trading in shares of Anglo Irish in London and Dublin have now been suspended.
Recapitalisation plans for fellow Irish banks AIB and Bank of Ireland, which runs saving accounts for the Post Office in the UK, are set to continue as planned.
In September 2008, Anglo Irish reported a profit before tax of €784 million and claimed it was "well positioned for the recessionary economic environment ahead".
However, since then its funding position has been hit by the rapid downturn.
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