Nationalisation of banks ‘inevitable’

TWO senior economists have claimed the nationalisation of the country’s main banks is inevitable in order to restore confidence to the sector and to allow financial institutions to resume normal lending practices.

The Oireachtas Joint Committee on Finance and Public Service heard yesterday that temporary state ownership of the banks would be necessary to recapitalise them, regardless of the success or failure of the Government’s proposed “bad bank” – the National Asset Management Agency (NAMA).

Trinity College Dublin economist Patrick Honohan warned that a “do nothing” approach to the thorny question of further recapitalisation would result in “zombie” banks, an under-performing economy and a much higher ultimate cost to taxpayers.