State stakes in BofI and AIB even greater
AIB almost fully-nationalised
Following the confirmation of an EU/IMF rescue plan, it is understood that AIB will be almost fully State owned and Bank of Ireland will be nationalised.
The EU/IMF €85bn facility will most likely be used to recapitalise the Irish banks, boosting their capital levels from eight to 12pc.
By raising the amount of funds held in reserves, it is hoped investor confidence will be bolstered as it will cushion any loan losses.
It is understood the Government will take a 99.9pc stake in Allied Irish Bank. The 0.1pc remaining will be left on the stock exchange. Authorities realised the bank needs extra funds but is reluctant to fully-nationalise it.
The State currently owns 36pc of Bank of Ireland but following further funding from the EU/IMF facility, it is expected that Government will take a 65pc stake.
Separately, it is hoped that EBS will be sold off quickly. Two preferred buyers — Irish Life & Permanent and a consortium of international investors led by Cardinal Capital Group – have already emerged for the ailing building society.
Shares in Bank of Ireland are down over 13pc at 26 cent, while AIB shares have fallen over 22pc to 26 cent.
Yesterday, Central Bank Governor Patrick Honohan said that all the Irish banks are ‘for sale’.
He said he would welcome any offers from foreign buyers.
“I have been an advocate for a number of years for small countries to have foreign owners for their banks,” said Honohan.