News

A new plan has been submitted to the Irish Government for a recapitalisation of the Irish bank sector involving a combination of state aid and new private investment, it emerged last night.

The proposal, put forward by the Association of Investment Managers (IAIM), would see at least ten Irish and foreign institutions provide new capital for six banks and financial institutions.

The potential investors believe the process of recapitalising the Irish banks "offers an investment opportunity and returns which are attractive to them and their clients", the IAIM said.

The plan is said to involve an injection of more than €2bn into the firms covered by the Irish State guarantee scheme: AIB, Bank of Ireland, Irish Life Permanent, Anglo Irish Bank, the Educational Building Society and Irish Nationwide Building Society. That money would be matched by funds from the Irish government or a government body.

"It is proposed that institutions which wish to be involved would co-invest with the State in the raising of new Tier 1 capital [cash reserves set aside by a bank to absorb unforeseen losses] for Irish-listed banks. A number of domestic and overseas institutions have indicated their support for the initiative. Other overseas institutions will be contacted over the coming days," the IAIM added.

The IAIM plan follows intense debate about the future of Ireland's banks following an approach to Bank of Ireland from the Mallabraca consortium - which comprises US private equity investors JC Flowers, Carlyle Group and two Middle East funds.

Mallabraca's move has run into opposition in Ireland over fears it could lead to heavy job losses. Reports have suggested the consortium wants to merge the bank with Irish Life & Permanent.