Minister admits State could end up owning banks
FINANCE Minister Brian Lenihan yesterday admitted the country's leading banks may still have to be partly taken into State ownership after the setting up of his "bad bank".
If the National Asset Management Agency (NAMA) pays heavily discounted prices for €90bn of toxic property loans, it will drain the financial assets of banks like AIB and Bank of Ireland, and they may be forced to seek further funding from the State.
The State would get bank shares in return, and could even become the majority shareholder.
Mr Lenihan admitted this scenario could occur, but said he was still opposed to nationalising the banks before setting up NAMA.
"It has been made very clear that if the losses are of that scale, then of course it will require an increased public ownership of the institution," he said.
The State already owns 25pc each of Bank of Ireland and AIB in preference shares, having spent €7bn to boost the banks' depleted capital bases.
But Mr Lenihan said he did not envisage fully nationalising another bank -- as he had to do in the case of Anglo Irish Bank.