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Irish banks to get fresh billions Irish banks to get fresh billions
(30 minutes later)
The Irish government will inject another 8.3bn euros (£7.4bn, $9.9bn) into the nationalised Anglo Irish Bank, it has been announced.The Irish government will inject another 8.3bn euros (£7.4bn, $9.9bn) into the nationalised Anglo Irish Bank, it has been announced.
No new government money is likely to be invested in Bank of Ireland, Finance Minister Brian Lenihan said. Irish Finance Minister Brian Lenihan said pumping in more money was "the least worst option".
This bank will instead try to raise the money it needs from private investors. Allied Irish Banks and Bank of Ireland will try to raise money from private investors.
Allied Irish Banks will also try to raise money privately, but will probably require taxpayer support, he added. But Allied Irish Banks will probably require taxpayer support, the finance minister added.
No new government money is likely to be invested in Bank of Ireland.
The second bailout follows the nationalisation of Anglo Irish Bank last year.The second bailout follows the nationalisation of Anglo Irish Bank last year.
The Irish government also owns 25% and 16% stakes in Allied Irish Banks and Bank of Ireland respectively.The Irish government also owns 25% and 16% stakes in Allied Irish Banks and Bank of Ireland respectively.
"Finding a long-term solution for Anglo Irish Bank is by far the biggest challenge in resolving the banking crisis," said Mr Lenihan, defending the fresh injection of equity into the lender."Finding a long-term solution for Anglo Irish Bank is by far the biggest challenge in resolving the banking crisis," said Mr Lenihan, defending the fresh injection of equity into the lender.
"The unavoidable reality is that the bank has incurred losses from its large-scale property lending and needs substantial further capital."The unavoidable reality is that the bank has incurred losses from its large-scale property lending and needs substantial further capital.
"Unpalatable as it is, only the taxpayer can provide that capital. It is the least worst option.""Unpalatable as it is, only the taxpayer can provide that capital. It is the least worst option."
Meanwhile the Irish Republic's state-run "bad bank", has announced the first loans to be transferred to it from struggling banks. Toxic asset plan
We need to translate international confidence into the banking sector... and sort it out once and for all Brian Lenihan, Irish finance minister A further 2.6bn euros will also be invested in the Irish Nationwide Building Society, which struggled after it invested heavily in commercial property before the financial crisis.
The National Asset Management Agency (Nama), which was created last year, will buy 1,200 bad loans from the banks for a total of 8.5bn euros (£7.6bn, $11.4bn). The injection of new cash is the first prong of the government's strategy for dealing with its faltering banking sector.
The second involves taking on the banks' toxic assets in the state-run "bad bank" - the National Asset Management Agency (Nama).
Irish banks invested heavily in the commercial property sector
On Tuesday it announced that it would buy 1,200 bad loans from the banks for a total of 8.5bn euros - less than half their face value.
Speaking before the announcement, Eoin O'Callaghan, European economist at BNP Paribas, said the transfer of bad loans was important progress.Speaking before the announcement, Eoin O'Callaghan, European economist at BNP Paribas, said the transfer of bad loans was important progress.
"This is the start of the plan… designed to cut the vicious circle in Ireland whereby banks aren't lending in to the economy, which is making things worse and making their own loan portfolios less likely to be paid back, making the banks even less likely to lend," he told the BBC."This is the start of the plan… designed to cut the vicious circle in Ireland whereby banks aren't lending in to the economy, which is making things worse and making their own loan portfolios less likely to be paid back, making the banks even less likely to lend," he told the BBC.
'International confidence' Contrasting fortunes
Irish finance minister Brian Lenihan told RTE radio that further action was needed, saying that the banking sector needed to be sorted out "once and for all".
"The Irish state has established its own credibility as a state that can manage its own finances. There is huge international recognition of that now," he said.
"We need to translate all that international confidence into the banking sector as well, and sort it out once and for all."
Irish plans to increase taxpayer stakes in the major banks are in contrast to the position of other countries hit by the financial crisis.Irish plans to increase taxpayer stakes in the major banks are in contrast to the position of other countries hit by the financial crisis.
In the US, several bailed-out banks have recovered sufficiently to repay the government aid they received.In the US, several bailed-out banks have recovered sufficiently to repay the government aid they received.
This month the US government announced plans to sell back its 27% stake in Citigroup - one of the banks hardest hit by financial crisis.This month the US government announced plans to sell back its 27% stake in Citigroup - one of the banks hardest hit by financial crisis.
In UK, the government is expected to consider selling back its stakes in Lloyds Banking Group and Royal Bank of Scotland later this year.In UK, the government is expected to consider selling back its stakes in Lloyds Banking Group and Royal Bank of Scotland later this year.
Expectation of further action by the Irish government has caused bank shares to fall again on Tuesday, following sharp falls on Monday.Expectation of further action by the Irish government has caused bank shares to fall again on Tuesday, following sharp falls on Monday.