THE €75bn GAMBLE

THE bank bailout could cost taxpayers a staggering €75 billion – and Anglo Irish Bank alone could account for €40bn of it.

Taoiseach Brian Cowen promised last year to write whatever cheques were necessary to rescue the banks – and the huge cost of meeting that promise became clear yesterday. Shortly after the markets closed, Finance Minister Brian Lenihan rose to his feet and informed a hushed Dáil:

* €8.3bn will be pumped into Anglo this week, on top of €4bn already injected into the ailing bank.

* Anglo may yet require a further €10bn to cover future losses.

* €2.6bn will be pumped into Irish Nationwide, with the state taking ownership of the institution.

* EBS will also be effectively nationalised, with the Government putting €100 million of capital into it immediately and prepared to inject more if the need arises.

* Allied Irish Bank will need to raise €7.4bn by the end of year to plug the hole in its balance sheet and if it can’t raise the capital privately, the state will step in.

* Bank of Ireland must raise €2.7bn, but is in a stronger position than the other banks and expects to be able to raise the money privately.

* The first tranche of high-risk loans being transferred from the banks to state agency NAMA will cost €8.5bn – a discount or “haircut” of 47%.

At a press conference last night, Mr Lenihan described the actions as the “final, decisive steps” to resolving the problems in the sector – but was unable to say what the “bottom line” would be. Before yesterday, the Government had already injected €11bn of capital into Anglo, AIB and Bank of Ireland. Yesterday’s recapitalisation measures will add a further €11.1bn to the bill – €8.3bn for Anglo, €2.6bn for Irish Nationwide, and €100m for EBS. Anglo may yet require a further €10bn, and if AIB, in particular, cannot raise money on the markets, it too will need additional capital. Based on yesterday’s figures, meanwhile, NAMA could end up paying up to €43bn for the loans it is taking off the banks in a bid to cleanse their balance sheets.

This means the total bailout bill could reach €75bn or more – and Anglo could account for over half of it. This is because, in addition to the potential €22.3bn recapitalisation requirements for Anglo, NAMA could pay up to €18bn to acquire loans from the bank. But the Government stressed that taxpayers will see returns for some of the massive investment. It believes NAMA will eventually achieve a profit on the loans it is taking over, while the shareholdings in the banks will also yield money to the state.

But the Opposition criticised the enormous scale of Bailout Tuesday – and blamed the Government’s economic policies for fuelling the property boom that led to the bank bust.

Fine Gael leader Enda Kenny said the Government was “strangling the next generation” with debt. Labour leader Eamon Gilmore said the day “crystallised more than a decade of mismanagement” by Fianna Fáil, which had pursued ruinous policies “hand in glove” with developers and bankers. Mr Gilmore said it was time for Mr Cowen to accept responsibility and “say sorry” to the country.

But Mr Cowen refused to do so, saying there had been a global banking crisis and it was “time to recognise we were not immune”.

Mr Lenihan, meanwhile, laid the blame at the door of the bankers and, to a lesser extent, previous regulators.

The banks, he said, had “played fast and loose” with the economic interests of the country. “The detailed information that has emerged from the banks in the course of the NAMA process is truly shocking,” he stated. “At every hand’s turn our worst fears have been surpassed.” The previous regulatory system, meanwhile, had “failed abysmally”, he added.

More detail will emerge today when Anglo releases its annual results – which are expected to show the heaviest losses in Irish corporate history.