Cowen pledges to reveal bank plan 'within weeks'
Taoiseach Brian Cowen yesterday confirmed that the Government's plans to restructure the banking sector are imminent -- paving the way for further taxpayer investment in the banks.
By the end of this month, it is expected the amount of capital each of the banks needs will be announced by the Government.
These figures will inform how much the banks need to raise in the markets and the consequent injection from the taxpayer. The updated markdown on the value of the initial loans going across to NAMA will also be announced.
And the plan for a third force in Irish banking is also in the pipeline.
Mr Cowen stressed the importance of the Government's plans to restructure the banks next month. And he confirmed that recapitalisation would form part of the overall plan.
"What's absolutely critical is that we will now proceed in the coming weeks with a comprehensive approach to all of this," the Taoiseach said yesterday.
"It's in the interest of protecting jobs and ensuring recovery for the economy.
"Banks have indicated that they are seeking to raise private capital through disposal or through a rights issue but obviously, in view of the fact that NAMA is making people come forward with declaring the scale of their losses up front, recapitalisation plans will have to involve state investment as well.
"We'll deal with all that in a comprehensive statement in the coming weeks."
Mr Cowen added: "People need to understand that what we have to do is make sure that we restructure the system in a way that gets credit flowing again quickly rather than more slowly, and the way to do that is to make the big decisions now, and we have the plans in place, the mechanisms in place and the international community and the investment community throughout the world recognises that Ireland is on the right road, that Ireland is taking the decisions."
The Taoiseach also said he still expected the economy to return to growth this year.
"Yes, we believe that in the second part of this year we can get back to growth in this economy. We believe that 2011 can be a period of growth for the economy again and it only will happen if we take the decisions now that have to be taken," he said.
But Mr Cowen stressed that the Government would be going ahead with the planned cuts to public spending, including €3bn in Budget 2011.
"We have stabilised the public finances and we now have to reduce deficits," he said.
"So there'll be further decisions that have to be taken in the next Budget, another €3bn will have to be identified and in the following Budget a further €3bn again. But we're going to do it, because it's the only way in which this country can recover."
The moves within the banking sector follow the EU's approval of the NAMA plan on February 26.
AIB and Bank of Ireland hope to hear back from the EU on their own restructuring plans over the next two months.
AIB said this week it hoped to raise most of the €4bn that analysts expect it would need by flogging assets -- before going to shareholders for funds
BoI hopes to go to shareholders for a large chunk of the €2.5bn it is estimated to need.
Anglo Irish Bank is expected to require a further €6bn in addition to the €4bn already pumped in.