Tuesday 19 September 2017

Ireland's main banks may need up to €54bn

Both AIB and Anglo Irish Bank admitted they had lost €13bn in deposits so far this year. Photo: Bloomberg News
Both AIB and Anglo Irish Bank admitted they had lost €13bn in deposits so far this year. Photo: Bloomberg News
Laura Noonan

Laura Noonan

IRELAND'S three main banks could require a €54bn bailout that would lead to their "de-facto nationalisation", according to a research note from Royal Bank of Scotland (RBS).

The comments come ahead of a weekend announcement on the banking bailout.

The package is believed to set the banks a capital target of 12pc against the current bar of 8pc. Irish analysts have suggested this could trigger a €3.5bn bailout for Bank of Ireland and AIB, while Irish Life & Permanent (IL&P) would need an additional €600m in capital.

A paper authored by RBS's banking team suggests the scale of the bailout could be far bigger. "We believe the quoted banks need €16bn of capital and €38bn of a funding lifeline," RBS said.

The figures were arrived at after making an "allowance" for "further deposit outflows on the back of the instability of the past week".

Both AIB and Anglo Irish Bank admitted they had lost €13bn in deposits so far this year. BoI lost €10bn over a six-week period in August/December, while IL&P lost €600m over the same timeframe.

RBS also notes the €54bn bailout cost could "rise materially" if there is further terming out of the banks' funding, but said the figure would fall if assets were sold. Crucially, the figures make no allowance for the transfer of further toxic assets from the banks' portfolios -- a prospect being explored by the Government.

If those loans aren't transferred out and the capital requirement stands at €18bn, RBS says AIB will end up 98pc government-owned, the State's share in BoI would rise from 36pc to 98pc, and IL&P would become 92pc state-owned.

Irish Independent

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