Ideological posturing of little use to economy

THE decision by the Irish Association of Investment Managers (IAIM) to put forward a bank recapitalisation programme will give the private equity players stalking the banks food for thought as they scramble to secure significant holdings in some of the country’s troubled institutions.

Crucially, perhaps, it gives Finance Minister Brian Lenihan an option beyond the private equity scenario. That option has caused much angst among the trade union movement — which wants the banks nationalised — and among the broader financial community which fears if the Government opts for the private equity solution, it will do long-term damage to the banks.

It is the nature of equity funds to get in and out within five years, which means they will be preparing a sell-off of the banks just three years after the Government guarantee scheme expires in September 2010.