Ireland to inject $34 billion into banks for reorganizing banking system

[News_Editor]

Ireland to inject $34 billion into banks for reorganizing banking system

2011-04-01 03:43:06 GMT+7 (ICT)

DUBLIN, IRELAND (BNO NEWS) -- Ireland's Finance Ministry on Thursday announced a system for reorganizing its banking system by injecting $34 billion (€24 billion) to recapitalize Irish banks.

"Under the plan, the Irish Government would reduce the number of domestic banks to two pillar banks, based around AIB and Bank of Ireland," said Finance Minister Michael Noonan.

As a result of this process, $29.74 billion (€21 billion) of core Tier 1 capital and $4.25 billion (€3 billion) of contingent capital will be injected into Irish banks in order to deter the country's banking crisis.

The two banking divisions will be forced to reorganize their operations into core and non-core functions. The first will serve the growth needs of the domestic economy and the latter will be sold off. It is expected that the Bank of Ireland, which is 36 percent state-owned, will be forced to sell off $42.48 billion (€30 billion) of assets by 2013.

Irish Life & Permanent will be restructured and forced to sell its lucrative pensions division Irish Life. On the other hand, Allied Irish Bank, once the biggest in the country, merged with EBS building society to form the second banking group.

"This radical restructuring of the banking system is designed to put the banking system on a firm footing for the future and break the bonds with our toxic banking past," added Noonan.

These actions will substantially strengthen the banks and give them a sound capital basis. In addition, the Irish banks will deleverage and downsize their balance sheets and in time regaining market access and providing credit to the Irish economy.

This is the fifth attempt to recapitalize the Irish banks and brings the total cost of bailing out the sector from $65.16 billion (€46 billion) to $99.16 billion (€70 billion). The European Central Bank (ECB) will support the banks throughout the process.

"The Governing Council of the ECB welcomes the Irish authorities' rigorous assessment of the capital needs of Irish banks and supports the government's commitment to ensure that these capital needs are met in a timely manner," ECB said in a statement.

In November 2010, the European Commission agreed on a joint financial support package for Ireland along the ECB and the International Monetary Fund (IMF). Ireland accepted the EU bailout after intense negotiations that divided the government then-led by former Prime Minister Brian Cowen who recently retired.

-- © BNO News All rights reserved 2011-04-01

[LaoPo]

Ireland to inject $34 billion into banks for reorganizing banking system

.....

pretty misleading title......the Irish government injecting money ?

They don't have a single penny left and the previous governments have been misleading and fooling around long enough with their so-called "guarantees" to the Irish banks.

A bloody shame and a bloody mess...

It's EU money.

LaoPo

[cdnvic]

Ireland is a financial whirlpool. They got tons of EU money a decade ago and blew it by the looks of things.

[ParadiseLost]

Next - Portugal, then Spain...