The government plans to inject €5 billion into AIB, Anglo and Bank of Ireland - Anglo may be effecively nationalised
THE government is planning to inject a total of €5 billion into Anglo Irish Bank, Bank of Ireland and Allied Irish Banks. It is considering effectively nationalising Anglo Irish Bank, putting in €1 billion in return for a stake of up to 80%.
It is planning to invest €2 billion in Bank of Ireland and another €2 billion in AIB. Private investors will be invited to subscribe for €1 billion in new shares in each of the two big banks. If these shares are not taken up, the state will undertake to buy them, bringing its total outlay to €7 billion.
Brian Lenihan, the finance minister, is demanding sweeping changes to the three banks’ senior management as part of the deal.
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Lenihan revealed yesterday that he’d asked Patrick Neary, the Financial Regulator, to investigate the scale of loans to Anglo Irish’s directors after he noticed that they seemed to be much larger than those at any of the five other institutions covered by the government’s guarantee of the banking system.
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The government taking effective ownership of Anglo Irish is seen as a temporary measure. Banking sources indicated that it will ultimately merge Anglo Irish with a bigger competitor or else wind down the bank’s business.
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