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Ireland set to own banks fully
By Steve Slater |
November 25, 2010, Thursday
|
Print Edition
Print Edition
IRELAND is set to take a majority stake in top lender Bank of Ireland as part of a massive international bailout that will effectively give the state full ownership of the country's two other biggest banks.
The European Union and International Monetary Fund have agreed a bailout of Ireland to shore up its banks and give them access to cheaper state funding.
The loan was expected to be up to 85 billion euros (US$114 billion) and billions of that could be used immediately to recapitalize the banks, but most will be a backstop in case they need more in the future and to ease funding strains.
Irish officials have said they want to overcapitalize banks and were expected to require they hold a core Tier 1 capital ratio of about 12 percent, giving a bigger cushion than most international rivals to withstand future shocks.
Pumping in necessary capital will likely mean the government could fully nationalize Allied Irish Banks and take a majority stake in Bank of Ireland in which it now has a 36 percent stake.
Anglo Irish Bank has already been nationalized after needing billions of euros to cover losses on commercial property loans.
Lifting the core Tier 1 ratio of Bank of Ireland, AIB and Anglo Irish Bank would cost almost 8 billion euros, Reuters calculations showed.
The European Union and International Monetary Fund have agreed a bailout of Ireland to shore up its banks and give them access to cheaper state funding.
The loan was expected to be up to 85 billion euros (US$114 billion) and billions of that could be used immediately to recapitalize the banks, but most will be a backstop in case they need more in the future and to ease funding strains.
Irish officials have said they want to overcapitalize banks and were expected to require they hold a core Tier 1 capital ratio of about 12 percent, giving a bigger cushion than most international rivals to withstand future shocks.
Pumping in necessary capital will likely mean the government could fully nationalize Allied Irish Banks and take a majority stake in Bank of Ireland in which it now has a 36 percent stake.
Anglo Irish Bank has already been nationalized after needing billions of euros to cover losses on commercial property loans.
Lifting the core Tier 1 ratio of Bank of Ireland, AIB and Anglo Irish Bank would cost almost 8 billion euros, Reuters calculations showed.
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