Bailout ‘might have been avoided’

AIB passed its stress test last year when the Government underestimated the discount NAMA would apply to its loans, according to European Competition Commissioner Joaquin Almunia.

Had the tests been realistic, the bank could have been nationalised earlier and the state might have avoided having to be bailed out by the EU/IMF according to economics professor Brian Lucey.

The cost of insuring against default on European sovereign debt climbed to records as concerns grew that Portugal would be forced to take a bailout.