Bank recapitalisation ‘depends on economy’

The state of the economy and, in particular, unemployment, combined with changes to the Basel III capital requirements, will determine whether Irish banks will need to be further recapitalised.

The ratings agency Standard & Poor’s in a research note on Wednesday concluded that Irish banks would need another recapitalisation on the basis of mounting mortgage losses and distressed business loans and that Irish government support for the banking system would be required for the next few years, at least.

The Government went into an EU/IMF bailout when it was forced to backstop banking losses. The State has pumped €64bn into the pillar banks plus IBRC.