Government expected to recapitalise IL&P early in the new year
THE Government has ruled out completing Irish Life & Permanent's recapitalisation by the end of the year but expects to have to make an injection of about €1bn early next year.
The need for a further state contribution was triggered by last month's collapse of Irish Life Assurance's mooted sale to Canadian insurance giant Great West LifeCo.
The extra capital had been expected to be stumped up by the end of the year, in line with Bank of Ireland's December 31 deadline for carrying out its recapitalisation.
But a spokesman for the Department of Finance confirmed that the money would not go in before the end of the year, adding that the recent 'white paper' setting out government spending for 2011 made no allowance to it.
The Government is understood to have already flagged the situation to the EU/ECB/ IMF troika, which is overseeing the reformation of the financial sector under the terms of Ireland's €67bn bailout programme.
A formal deadline for recapitalising Irish Life & Permanent is expected to be hammered out in January, when the troika carries out its next review mission.
Sources stressed that there was no sense the Government was going to try to delay putting in the cash in the hopes of quickly reinvigorating the sale of Irish Life Assurance.
When the sales process was suspended, the department said the eurozone crisis had spooked buyers and intimated that the efforts to sell the life insurer would resume when the crisis abated.
It is understood, however, that the Government has slim expectations of selling Irish Life Assurance before 2013.
The department previously said it would recapitalise in line with requirements laid down by the Central Bank; however, a Central Bank spokesman confirmed that these requirements didn't include a specific deadline.