Way now clear for Lenihan to nationalise AIB by end of week
PRESIDENT Mary McAleese last night cleared the way for the State to nationalise AIB by the end of the week.
In a brief statement, Mrs McAleese confirmed she had signed the Credit Institutions Stabilisation Bill into law, following a three-hour meeting of the Council of State.
The legislation, which passed through the Dail last week, gives Finance Minister Brian Lenihan the power to make sweeping changes to the banking sector.
Mr Lenihan is now expected to pump up to €4.5bn into AIB over the coming days, with some sources suggesting an announcement will come as early as today.
The injection will virtually wipe out AIB's shareholders, who have put tens of millions of euros into bank share investments over the last two years.
The Government initially wanted to keep AIB listed on the stock exchange but sources say "delisting" the bank is now a distinct possibility.
A spokesman for Mr Lenihan last night declined to be drawn on the details of the AIB plans. "The minister welcomes the President's signing of the bill," he said.
Opposition parties and the European Central Bank had raised concerns about the legislation.
While Mr Lenihan has clearly announced his desire to put money into AIB before the end of the year, the Central Bank last night stressed that there was no legal requirement to do so.
AIB, along with the other major Irish banks, was recently given an end-of-February deadline to meet tough new capital targets.
In AIB's case, the bank must raise almost €9.8bn by the end of February, a target that overtakes the €4.5bn AIB was originally mandated to raise by the end of the year.
The Government had hoped that putting the money into AIB sooner rather than later would help restore confidence in the bank and encourage depositors not to move their money.
As well as giving Mr Lenihan the power to act immediately on AIB, the Credit Institutions Stabilisation Bill also grants him unprecedented powers over the banking sector.
He will now be able to direct banks to take given actions, move loans and deposits between banks and force losses on so-called subordinate bondholders who loaned money to the banks at high interest rates.