THE Government is likely to have to inject further capital into AIB and Bank of Ireland as part of its “bad bank” plan to cleanse the sector of soured assets, a government minister said yesterday.
The State already has 25% voting rights in Bank of Ireland after a €3.5 billion capital injection through preference shares, while AIB investors will next month vote on a similar package.
“We will probably have to go in and recapitalise,” Eamon Ryan, the Minister for Communications, Energy and Natural Resources, said.
The Government is expected to unveil the broad outline of a new National Asset Management Agency, which will take over up to €90 billion worth of property loans from the banking sector in the next few weeks.
The agency will buy the loans at a discount to their book value, forcing the banks to write down the losses and require them to acquire more capital.
Shares in Bank of Ireland and Allied Irish were both down 1c in trade yesterday.
The shares have dropped about 30% since the Government said in early April that it may take further stakes in the lenders.
Separately, it appears a joint venture between property firm CB Richard Ellis and London-based REAM Capital Partners had been talking to Irish banks about taking stakes in their commercial property loan books.
REAM managing partner Michael Birch told the paper the joint venture had tens of millions of pounds and access to hundreds of millions more, to invest in the Irish banks’ loan books.
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