Banks may need further capital injection, says Hurley

MORE cash may have be injected into Bank of Ireland and AIB in the coming months, Central Bank governor John Hurley told an Oireachtas Committee yesterday.

Outgoing financial regulator Patrick Neary was also criticised by TDs for failing to turn up before the all-party body even though he doesn’t officially retire until next week.

Last month Finance Minister Brian Lenihan announced a plan to recapitalise Bank of Ireland and AIB to the tune of €2 billion but has ruled out taking them into State control like Anglo Irish Bank.

Mr Lenihan also reiterated that the country’s top two banks are solventand working well but Mr Hurley refused to rule out further Government intervention.

Mr Hurley said: “The financial institutions are a critical part of the economy and are a critical support to the economy and it is vital that they should function properly.

“I think we can’t rule anything out. But it seems to me that we have to let what is in course run its course,” the Central Bank governor told the Finance and Public Service Committee.

Mr Lenihan reiterated that Government policy on banking is to secure the sector.

“As you know at all stages since last autumn we have done everything in our power to ensure that our banks are solvent and that they are working well, lending into the real economy.

“That’s the Government’s policy on banking. We’ll take whatever steps are necessary to ensure that.”

He added: “But there are no proposals before me to nationalise either of these institutions [BoI and AIB] this morning.”