All eyes turn to banking bailout
It is also expected that NAMA will today announce details of the first haircuts the banks are facing.
Energy Minister Eamon Ryan said the Government will probably have to raise its stakes in some of the country’s lenders to replace capital depleted by surging bad debts.
The discounts will probably be bigger than the average 30% envisaged last year, Mr Ryan said.
Reports yesterday said AIB may end up with a 70% government stake, with Bank of Ireland facing a 40% state holding.
The announcements will come as Bank of Ireland and Anglo Irish Bank report results and the financial regulator sets out new capital requirements for the banks.
Finance Minister Brian Lenihan is expected tomorrow to detail how much capital each of the country’s banks will need and the level of state ownership.
Bloxham analyst Kevin McConnell said: “We are into the endgame now. By the end of the week, we should know how much capital they will need.”
He believes AIB may require €4.4 billion and Bank of Ireland €3bn. Anglo Irish Bank will need as much as €9bn, chief executive Mike Aynsley has said.
The banks will be under pressure to raise capital and, if they can’t do this themselves, the Government will have to step in, says Davy analyst Emer Lang. “But there’s far too many variables to say that at the moment.”
AIB, with units in Poland and the US, “can raise a lot by selling assets, for example,” she added.
AIB spokeswoman Catherine Burke said discussions on capital are “ongoing”. According to reports yesterday, AIB is facing a capital deficit of up to €9bn, with the State expected to take as much as a 75% stake in the lender.
Bank of Ireland spokesman Dan Loughrey had no comment.
Anglo is expected to report earnings this week for the 15 months through December 2009, after a loss of €3.8bn in the six months through March 2009.
Bank of Ireland will report results tomorrow.
Meanwhile, employers’ union IBEC said the economic crisis and the establishment of NAMA had left the existing public investment strategy in need of urgent review.
The group said the lack of clarity on the issue was a real concern to business and was undermining the ability of the private sector to play an active part in future capital investment plans.
IBEC director general Danny McCoy said: “Everyone now accepts that resources are much more limited. However, businesses are eager to both invest directly and provide funding for capital investment projects. This is proving difficult in the absence of an up-to-date public investment strategy.”
