Stress tests announce further €24bn for stricken banks
The final bill for bailing out Ireland’s banks will be €70bn after stress tests by the Central Bank in Dublin detailed that four institutions need another €24bn.
Central Bank Governor Patrick Honohan said AIB will need €13.3bn, Bank of Ireland will need €5.2bn, the EBS will need €1.5bn while Irish Life and Permanent will need a whopping €4bn, more than double what was expected.
The Central Bank has also set targets for how much the banks must reduce in size.
Governor Patrick Honohan said the aim is to create a sustainable Irish banking system through a combination of recapitalisation and reorganisation.
Mr Honohan said the refinancing lifelines set out were exceptionally conservative.
“Banks will be capitalised as the additional capital requirements announced today provide for future loan losses over the course of the three years on a scale that is unlikely to occur and an additional buffer for subsequent events,” he said.
“The data assembled in this exercise has been published to enable independent analysts to see the basis on how we have determined loan loss projections and to create more transparency about the final costs of resolving the Irish banking system.”
The Governor said the aim was to create a sustainable banking system through “recapitalisation, deleveraging and reorganisation”.
The Central Bank said it wanted to put Irish banks in a position where they can fund themselves and generate cash without having to call on citizens to cover the bill.
The €70bn identified includes €46bn already promised since the bank guarantee scheme was devised late one night in September 2008.
Finance Minister Michael Noonan announced that the Government would reduce the number of domestic banks to two new “universal pillar banks”.
