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Business

Three main Irish banks to receive 5.5 billion euros in state help

Latest update : 2008-12-21

Anglo Irish Bank, Bank of Ireland and Allied Irish Banks will receive a total amount of 5,5 billion euros from the state according to a new plan. Ireland was one of the first countries to unveil a bailout plan for its banking system.

AFP - The Irish government on Sunday said it was injecting 5.5 billion euros (7.6 billion dollars) into three of Ireland's major banks, as part of a recapitalisation rescue package.
  
The financing involves an initial investment of 1.5 billion euros for Anglo Irish Bank, and two billion euros each to Bank of Ireland and Allied Irish Banks, a statement from the finance ministry said.
  
The capital injection for Anglo Irish Bank is likely to take place after an extraordinary general meeting in mid-January, and for Allied Irish Bank and Bank of Ireland by the end of the first quarter of 2009.
  
Dublin "will continue to reinforce the position of Anglo Irish Bank and will make further capital available if required so that it remains a sound and viable institution," the statement said.
  
The government's move follows revelations last week that Anglo Irish's chairman and former chief executive officer Sean FitzPatrick failed to disclose an 87-million-euro loan from the bank.
  
FitzPatrick, who had been the bank's chief executive for almost two decades before becoming chairman in 2005, resigned on Thursday, as did non-executive director Lar Bradshaw.
  
FitzPatrick admitted the "inappropriate" concealment of the loan and said Bradshaw had not been aware the loans were being concealed.
  
Over a period of eight years to 2007, FitzPatrick temporarily transferred loans with Anglo Irish Bank to a building society so they did not show up in the bank's report in the note relating to directors' loans.
  
"This transfer of loans did not breach banking or legal regulations. It was, however, inappropriate from a transparency point of view," FitzPatrick said.
  
On Friday, Anglo Irish's group chief executive David Drumm stepped down saying news of the concealed loan made it "appropriate" for him to quit.
  
Ireland was one of the first countries to respond to the global credit crisis with a two-year unlimited guarantee scheme for banks that involves a contingency liability of 485 billion euros.
  
A week ago Finance Minister Brian Lenihan announced a 10-billion-euro rescue of Ireland's six main banks, and asked the institutions to bring forward proposals in January.
  
"The government has decided either through the National Pensions Reserve Fund or otherwise... to support, alongside existing shareholders and private investors, a recapitalisation programme for credit institutions in Ireland of up to 10 billion euros," his office said at the time.

Date created : 2008-12-21

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