The state has received almost €720m in payments from the seven financial institutions covered by the government's bank liabilities guarantee scheme.

Figures provided by the Department of Finance reveal that €548m was handed over by the banks in the period from the guarantee's inception in September 2008 until the end of 2009, while a further payment of almost €170m was made by the banks in recent days to cover the first quarter of this year.

The money raised by the guarantee is held in an account in the Central Bank, the department said. The department did not provide a breakdown of payments by individual institutions.

When the guarantee was introduced finance minister Brian Lenihan said it would raise about €1bn over its two-year lifespan. The bank charge is supposed to cover the long-term costs of borrowing for the state incurred by the provision of the guarantee.

According to a report by RTE last week, the chief executives of AIB and Bank of Ireland worried that too high a fee for the guarantee would destablise the banking system.

But through the first nine months of the programme the banks' payments actually came in far below original expectations. Lenihan said last summer the fees paid had been less than first estimated because the charging model originally included €90bn in deposits covered by the enhanced deposit protection scheme, which is funded through a separate mechanism and does not affect the State's bond spread or debt rating.

The new 'eligible liabilities guarantee scheme', which updates the original guarantee, carries much more punitive fees as an incentive to get banks to issue more new debt outside the state's protection. Two weeks ago Irish Life & Permanent issued $1.75bn of three-year fixed-term debt under the new programme, paying the government a 0.5% fee for the privilege.

The guarantee runs out on 29 September of this year, though term deposits that have a maturity of up to five years and were taken before the guarantee expires will still be covered for the duration of their term.