Ireland: Banking Wreck
September 30th, 2010Via: Bloomberg:
Ireland is preparing to take majority control of Allied Irish Banks Plc and pump extra cash into Anglo Irish Bank Corp., raising the cost of repairing the financial system to as much as 50 billion euros ($68 billion).
“The Irish banking system is at rock bottom today,” Finance Minister Brian Lenihan said today in a Bloomberg Television interview in Dublin. He rejected speculation Ireland will need outside help. “It can only revive from now because it’s recapitalized and reformed,” he said.
Ireland’s deteriorating finances fueled investor concerns that it would become the first government after Greece to tap the 750 euro-billion rescue fund set up by the European Union and International Monetary fund to stanch the debt crisis. Irish bonds have plunged this month, sending the yield on 10-year securities to higher than any other euro nation except Greece.
The cost of bailing out the country’s banks may ultimately rise to about 50 billion euros, under a “stress case” scenario for Anglo Irish, according to figures published by the country’s finance ministry and the central bank in Dublin today. The base case estimate is about 45 billion euros, the figures show. Allied Irish may need as much as 3 billion euros.
Among the biggest Irish lenders, only Bank of Ireland Plc and Irish Life & Permanent Plc will remain outside state control after the bailouts.
