No institution is likely to reject offer

NO Irish bank is immune from the current financial turmoil and none is likely to turn their back on the Government-backed proposed €10 billion recapitalisation bailout, banking analysts believe.

Goodbody Stockbrokers banking analyst Eamonn Hughes notes that theGovernment believes “in current market conditions, even fundamentally sound banks may require additional capital to respond to widespread market perception higher capital ratios are appropriate for the sector internationally”.

Mr Hughes interpreted this comment to indicate the Government views that no bank is immune to current market developments, so presumably will be talking with all banks in the covered programme.

“Also, we suspect that it will be hard for any bank to remain outside the scheme, given how they would look relative to the rest of the recapped system — just look at what happened to Barclays and ING.”

Davy Stockbrokers categorised the Government’s statement on the €10bn re-capitalisation as being “effectively a holding statement, as it is very light on detail, it should go some way to restoring calm as we head into the Christmas break”.

Davy’s said that €10bn is sufficiently large to get the market’s attention, but said this is believed to be a “notional figure”.

“If this was all equity and split among the four quoted players, it would be enough to push core equity ratios up towards 8.5%,” they added.

Davy also believe that there is here “an obvious first mover advantage” to the Irish bank that is first to market with a government-backed re-capitalisation plan in the New Year.

Merrion Stockbrokers Sebastian Orsi said on their forecasts, to achieve an 8% core tier I capital ratio at end 2008 for AIB, or end 2009 for Anglo and BoI, would need €2.5bn, €2.1bn and €2.3bn of equity capital, respectively.

Bloxham stockbrokers said that one thing is now completely certain: “There will be capital available for the Irish banks to bolster balance sheets.