Deutsche bank to advise on plans

AS THE battle to invest in the underfunded Irish banks intensifies, investment institutions fronted by IAIM (Irish Association of Investment managers) have appointed Deutsche Bank as financial advisor.

Deutsche and Credit Suisse were the banks which advised British prime minister Gordon Brown’s government on the £37 billion (€44bn) investment package put together to keep the British banks from going under. The announcement came as the six Irish banks again met the Finance Minister Brian Lenihan to discuss their re-capitalisation plans and to hear their views on potential mergers.

In its head-to-head with Mr Lenihan, Irish Life & Permanent made it clear it would legally challenge any attempt by the Government to force it to merge with Bank of Ireland.

After the meeting IL&P chairwoman, Gillian Bowler, said she had “absolutely no comment” to make on that proposal favoured by the Government as it struggles to create two main Irish banks led by AIB and Bank of Ireland — a move it sees as vital to the long term interest of the economy.

As those talks continued Labour Party Leader Eamon Gilmore warned against the dangers of the banks falling under the control of the US private equity firms, led by Mallabracca.

They have offered to pump €5bn into Bank of Ireland and to provide €60bn in bank funding over five years.

Mr Gilmore told TV3 News: “The danger here is that you end up with the banks ending up like Eircom where they’re bought and re-bought three or four different times, where the people with the money and the funds walk away with the profits”.

In the end, the banking infrastructure this country needs will end up having “the guts ripped out of it, and we’ll be in a sorrier state”, he warned.

Davy Research in a note on the Central Bank’s credit figures, which showed a sharper decline in October, warned the current slump if it persists could see demand for credit fall in real terms from mid-2009 onwards.

Mounting bad property debts and the slump in the economy means the banks will be under pressure to fund their balance sheets.

“The first thing is that Irish banks re-capitalise a process that looks inevitable now,” it said.

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