Lenihan urged to reveal maximum limit on bank bailout

FINANCE Minister Brian Lenihan has been urged to spell out exactly how much of taxpayers’ money he is prepared to pump into the country’s struggling banks.

The estimated cost of the bailout of Anglo Irish Bank has risen to €24 billion since the Government nationalised the institution in January 2009 and pumped €1.5bn into it.

Similarly, the estimated cost of rescuing Irish Nationwide Building Society has now risen to €4bn.

The latter figure was revealed by Central Bank governor Patrick Honohan in a speech to Renmin University in Beijing this week.

Labour finance spokeswoman Joan Burton accused the Government of using Prof Honohan to “drip-feed bad news” about the bailout. She called on Mr Lenihan to “come clean” on the amount the Government is prepared to pump into the banks.

“Irish citizens will find it extraordinary that the Government is using the Central Bank governor to drip-feed bad news about the Irish banks from halfway across the world,” Ms Burton said.

“At every stage of Ireland’s banking crisis, the Government has insisted that they have the costs under control, only for this to be blown out of the water by the next multi-billion euro announcement.

“Between Anglo Irish Bank and Irish Nationwide alone, we are already looking at a bill for nearly €30bn. This figure may have risen yet further by the time NAMA loan transfers are completed next year.”

Ms Burton said Mr Lenihan bore responsibility for the “faltering” bank strategy: “It is high time that he appear before a specially convened meeting of the Oireachtas Finance Committee to come clean on the true scale of Fianna Fáil’s bank bailout.

“Does he have any realistic idea of what the final bill will come to? It’s as if he has left the taxpayers’ credit card behind the bar for a bankers’ free-for-all.”

In his speech on Tuesday, Prof Honohan said the Government had little alternative in September 2008 but to introduce an extensive guarantee of bank liabilities.

“There has been a great focus on the budgetary cost of bank recapitalisation. Exact precision cannot be expected in such matters but… Anglo may impose a net cost to the Government of about €22bn to €25bn, to which can be added about €4bn mainly to cover one small building society.”