Lenihan signals intent to resolve bank issues in first quarter
Published 04/01/2010 | 16:17
Finance Minister Brian Lenihan said the government will provide more capital to the country’s banks if needed and that he aims to resolve the issue in the first quarter.
Lenihan said his so-called bad bank, which will remove souring loans from banks led by Allied Irish Banks and Bank of Ireland will “accelerate losses” at the lenders.
If the banks “can’t raise funds,” then the government will provide the capital and there will be “a greater public ownership,” he said on RTE Radio in Dublin today. That will be decided “in the first quarter of this year.”
Lenihan, who said he plans to remain in his ministerial role while receiving treatment for cancer, is taking over toxic property loans in order to bolster the financial system, which nearly collapsed last year in the face of a property crash. Allied Irish rose as much as 13pc to €1.36 in Dublin today and was at €1.30 as of 3:37pm. Bank of Ireland increased 11pc to €1.47.
“With an economic recovery underway, we don’t need a banking system that is not in a position to support credit flows,” Lenihan said. The minister also said that public finances are “stabilising” after the budget deficit widened to an estimated 11.7pc of gross domestic product in 2009.