THE Irish government is poised to reveal moves to effectively nationalise its crippled financial system.
Dublin will outline plans for a “credible banking structure” tonight when it publishes the results of stress tests that are expected to signal the effective nationalisation of the entire financial system.
Finance minister Michael Noonan is due to address parliament after the results of the tests are announced.
Enda Kenny, the Taoiseach, told parliament that Mr Noonan would “outline decisions that are being taken by government in respect of preparing for the results of the stress tests and in taking definitive steps to ensure that we have a strong, working, credible banking structure”.
Ireland’s new Government, the International Monetary Fund and the European Union all hope that the results will allow the country to put a final figure on the cost of dealing with its banking crisis and persuade investors that it can avoid another damaging restructuring.
Local reports have said this week that Ireland’s four viable lenders, Irish Life & Permanent, Bank of Ireland, Allied Irish Banks and EBS Building Society, will need between €18 billion ($24.6bn) and €23bn in extra capital after the stress tests.
This would be less than the €35bn it was once feared would be the cost of propping up the country’s banking system, but would increase the bill for the bailout to €45,000 per taxpayer.
Ireland’s Enterprise Minister Richard Bruton said the stress tests were needed to draw a line under the crisis.
“Afterwards, there can be no feeling that people are looking at Irish banks through rose-tinted glasses … Our ambition is to clean the table and we will do that,” he said.
In a further blow to the country’s recovery, share-dealing in Irish Life & Permanent, the troubled banking and insurance group, was suspended in Dublin and London yesterday amid speculation that it too might have to be taken under state ownership.
The shares collapsed by 46 per cent on Tuesday to less than €0.41, after reports suggested that the Irish Government was poised to inject huge sums of rescue capital into it.
ILP is the Republic’s biggest mortgage lender and supplier of private pensions.
While its pensions and insurance arm Irish Life is profitable and strong, it has been dragged down by its banking arm.
RTE, Ireland’s national television network and broadcaster, reported the stress test on ILP would reveal a need for immediate capital of €600 million to €1.2bn.
