Investment managers give Lenihan a lifeline

FINANCE Minister Brian Lenihan was thrown a lifeline yesterday by Irish fund managers who pledged €2 billion to help fund the beleaguered banks.

The overall package involves an investment of €4bn because the fund managers represented by the Irish Association of Investment Managers (IAIM) expect the Government to match that amount.

It also said that it expects to raise further significant sums from overseas funds if the plan is endorsed by the Government.

Anger at the prospect of being left out of the re-capitalisation of the banks, as happened in Britain, has prompted IAIM to make its case before any deal has been done with private equity funds, that would exclude them from the process.

IAIM’s chief executive, Frank O’Dwyer, said both Irish and British fund managers have been “big supporters” of the banks in Ireland for decades.

On that basis alone Mr O’Dwyer said those funds should not be excluded from this refunding process, given their previous support for banks in Ireland where — combined — they accounted for 80% of holdings in the major banks.

So far only Bank of Ireland has been linked publicly to the re-capitalisation debate.

It has been offered up to €5bn by a consortium of US private equity funds, but it is not clear if the investors want the Government to reciprocate by also taking a stake in the bank.

The offer of several billion from Irish funds is aimed at all of the banks, however.

Finance Minister Brian Lenihan insists investment by the State in the banks is a last resort.

His comments since this crisis first broke in late September have been measured and his welcome for the IAIM proposals yesterday is seen as a step in the right direction.

There is a growing belief that when the bluster is set aside the minister will in the end support the banks with an equity injection from the State.

The only issue is how that process will ultimately be achieved, some sources close to the process suggest.

IAIM believes its package would also solve the growing political and trade union opposition to privately owned overseas funds, described as “vultures” by some opposed to their proposed involvement in the process, getting their hands on the banks here for next to nothing.