The Irish government may tap the €18.7 billion ($25.6 billion) National Pensions Reserve Fund, Dublin, in an effort to recapitalize the countrys major banks with up to €10 billion in new capital, according to a statement released by the governments department of finance.
The investment may take the form of preference shares and/or ordinary shares, according to the statement. Public support would occur alongside existing shareholders and private investors, and be directed at major Irish institutions including the Anglo Irish Bank, Bank of Ireland, Irish Life & Permanent and Allied Irish Banks.
Ireland in September became the first European country to guarantee the deposits and debt of its largest lenders. But so far, government intervention has not included direct injections of public money into the banks.
However, as banking shares continued to fall, the nations department of finance issued a statement Sunday announcing it would consider recapitalizing banks to ensure the long-term sustainability of the banking sector in Ireland and to underpin its contribution through the availability of credit to individuals and businesses in the real economy.
Details of the proposal, including its effects on the NPRF, were not given. John Corrigan, director of the fund, could not be reached by press time for comment.