Pension reserve funds to be spent on banks

UP to €15 billion from the National Pensions Reserve Fund, set aside when the Celtic Tiger was still roaring, is likely to be used to recapitalise three of the country’s banks.

Amid speculation last night that the rate of interest to be charged on the EU/IMF bailout could be as much as 6.7%, Fine Gael’s finance spokesman Michael Noonan said that kind of rate was “far too high” and unaffordable on any reasonable projection of growth.

The Department of Finance said the interest rate had still not been finalised, but given that much of the loan would be repayable over nine years the rate could be higher than the 5.2% charged to Greece but would not be as high as the 6.7% being quoted by some brokers.