| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

   
Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy

RSS FEED


How to use our RSS feed

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

We provide access to live business television and business related videos from: Bloomberg TV; The Wall Street Journal; CNBC and the Financial Times. Click image:

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax 2008

Climate Change Reports

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Content Management by interactivetools.com.

News : Irish Last Updated: Mar 31, 2010 - 6:23:00 AM


State funding of Irish banks may amount to €32bn - - 1 year's tax receipts; Banks accused of "reckless" lending and "shoddy practices"
By Finfacts Team
Mar 30, 2010 - 6:14:38 PM

Email this article
 Printer friendly page

Minister for Finance Brian Lenihan told the Dáil this afternoon that the State may need to provide more than €18bn to support Anglo Irish Bank and together with other funding of Irish financial institutions, the total may amount to €32bn or the equivalent of one year's tax receipts. The Minister accused the banks of "reckless" lending and "shoddy practices."

The Minister said he was planning to provide €8.3bn to Anglo Irish Bank this week, but additional capital will be needed to counter  losses. The current estimate is that this could involve another €10 billion over time. The €8.3bn will be paid over a number of years, reducing the cost to the Exchequer. Lenihan said he understood why people wanted to close the bank, but this would involve huge costs to the State, and also potential damage. He said he expected an exit of the bank from State hands in five to seven years.

The Minister said the results of  that what has emerged from the NAMA process is both "shocking," and the losses are "horrifying"; the worst fears about the banking system had been surpassed, and the banks had played fast and loose with the economic interests of the country. But the Minister said NAMA had carried out its valuations in a "hard-headed" manner.

Lenihan said: "Some institutions were worse than others. But the fact is that our banking system, to a greater or lesser extent, engaged in reckless property development lending. In too many cases there were also shoddy banking practices. The banks played fast and loose with the economic interests of this country.

Yes, our previous regulatory system failed abysmally and it is right that the role of the regulator, the Central Bank and the Government is now the subject of independent inquiry. But the fact remains that senior figures in Irish banking made appalling lending decisions that will cost the taxpayer dearly for years to come. As I said in this House last September during the debate on the NAMA legislation: the banks should be extremely grateful for the continued support and forbearance extended by the citizens. They must now repay that debt by facilitating the economic recovery which is widely forecast to get underway in the second half of this year. The Government will insist that they do so by supplying credit to viable businesses and households in this State."

He said AIB would need to raise €7.4bn by the end of the year to meet targets. It plans to start selling off assets in Poland, the US and Britain to help raise this, but the State will have to take a stake in the bank.

Bank of Ireland will require €2.7bn in new capital, but it is hoping to meet much if this from private sources.

Irish Nationwide will require €2.6bn of new funds from the Government, most of which will be payable over 10 to 15 years while EBS will need €875m. The State will provide €100m by taking new shares in the society, which will give the Government full control.

The Minister said he was ordering AIB and Bank of Ireland to lend €3 billion each to businesses this year and next year.

The National Treasury Management Agency will manage the State's stakes in EBS and Irish Nationwide, as well as Anglo Irish Bank. Stakes in AIB and Bank of Ireland will continue to be funded and held by National Pension Reserve Fund.

The Minister said he was seeking EU approval for a modified extension of the bank guarantee scheme, which runs out in September. The extension will not cover subordinated debt.

State 'bad bank' NAMA anticipates that it will purchase €81bn of loans - -  and it is likely to become Europe's biggest landlord.

Allied Irish Banks said in a statement this evening: "We will undertake an equity capital raising prior to the end of 2010 to fulfil the remaining capital requirement following disposals and other actions to that time. Our current intentions are to have an equity issue targeted at private shareholders, that would be underwritten by international investment banks or the Government, with any residual requirement met by a conversion of Government preference shares into ordinary shares. The structure, timing and terms of the this equity raising are to be further considered in conjunction with the Government. In doing so, AIB intends to respect pre-emption rights of existing shareholders in any capital raising."

Lenihan's Statement

Banking Statement Supplementary Documentation

Credit Review Office - Information note

Related Articles
Related Articles


© Copyright 2007 by Finfacts.com

Top of Page

Irish
Latest Headlines
Ryanair revises up full-year profit guidance
AIB bank profitable in third quarter
Ryanair announces half-year profits up 32% to €795m
Ryanair benefits from improved customer service
Ryanair to buy 100 new Boeing 737 MAX 200
Finfacts server migration Thursday
State-owned Allied Irish Banks reports H1 2014 profit as bad loan charges plunge
Ryanair reports profit in its financial first quarter soared 152%
UK firm opens van dealership in Dublin
Ryanair reports 8% fall in full-year profit; US services to commence in 2019
Global Financial Centres Index: New York overtakes London; Dublin slips to 66 of 83 cities
Bank of Ireland reports “significant” improvement in 2013 results
Sale process of IBRC UK projects Rock and Salt completed
CRH says 2014 will be year of profit growth after reporting 2013 loss
Ryanair reports third-quarter loss
Irish Water says it saved €100m in setup costs
RSA Insurance fires two Irish executives for large loss/ accounting irregularities
Bank of Ireland will have to raise provisions by €1.4bn; AIB says it's "well capitalised"
CRH reports slightly improved third quarter
Central Bank says ownership of Newbridge Credit Union transferred to permanent tsb
Ryanair reports H1 profits rose by 1% to €602m
Dublin Web Summit: Irish Stock Exchange and NASDAQ OMX announce dual listing plan
Irish pension managed funds returned to growth during September
Dan O’Brien resigns as economics editor of The Irish Times
Central Bank says no action required on Anglo tapes revelations
Ryanair flew 9m passengers and Aer Lingus carried 1.1m in August
UK Competition Commission says Ryanair must cut Aer Lingus stake to 5%
CRH reports H1 2013 revenue dip and loss
Vodafone refunded UK after discovery of Irish tax haven deal
RBS reports half year profit; Ulster Bank posts reduced loss
Bank of Ireland cuts pretax losses in HI 2013 to €504m
Irish State-owned Allied Irish Banks reports losses of €758m in H1 2013
Service Announcement
Irish managed pension funds declined in June
VHI reports 2012 surplus of €54.3m; Health insurance made loss
Ex- Elan director says management / board "not competent to run a business"
Aer Lingus to put €140m in employees pensions fund; Ryanair apoplectic
Wednesday Newspaper Review - Irish Business News and International Stories - - May 22, 2013
Tuesday Newspaper Review - Irish Business News and International Stories - - May 21, 2013
Ryanair, Europe’s biggest low cost carrier, announced Monday record annual profits of €569m - - up 13%