Ireland’s banks will need a €24 billion injection to strengthen the country’s ailing banking system, pushing the government’s bailout of the financial sector to €70 billion.
Stressing testing of the country’s banks has revealed Irish banks need far more support than first thought. As the results of the tests were revealed, the Irish government announced a shake-up of the industry which is hoped will restore investor confidence.
Allied Irish, which had been told to raise €3.5 billion, must now find €13.3 billion. Bank of Ireland must find €5.2 billion.
Irish finance minister Michael Noonan said the government planned to create ‘two new strong universal pillar banks’ based around the Bank of Ireland and a new entity comprising Allied Irish Banks and the Educational Building Society.
‘The banking system must be the enabler of economic recovery, by restoring public market confidence in its financial health, management competence and ethical integrity,’ said Noonan.
He added that the plan would put the banking system on a firm footing for the future and break the bonds with our toxic banking past.’
This will be Ireland’s fifth attempt to rescue the banking sector and start to restore its economy, which has so far cost it €46 billion.