Banking hits AIB shares

The Government's stake in the bank is technically around 18pc, but it is expected this will increase to majority ownership before Christmas.

The news comes as global ratings agency Moody's slashed the ratings of several Irish banks in line with its five-notch downgrade for Ireland's sovereign debt last week.

Moody's said the sovereign downgrade could affect the Government's capacity to support the banking sector.

Allied Irish Banks has transferred property loans worth €9.3bn at a discount of 59pc to NAMA. The loans transferred yesterday were taken out by 217 customers.

The bulk of the loans were transferred at a discount of around 60pc, forcing it to seek fresh capital to bulk up its balance sheet.

Reports have said the Government is expected to effectively nationalise AIB, once the country's largest listed lender, before the end of the year as part of an €85bn EU/IMF bailout package.

Under the bailout, NAMA will take over an additional €16bn in land and development loans from AIB and Bank of Ireland after removing a €20m threshold on individual loans.

AIB needs to raise nearly €10bn to boost its Core Tier 1 capital, a measure of financial strength, by the end of February.

The Government wants it to raise its Core Tier 1 capital ratio to 8pc by the end of this year and will inject capital to meet that threshold.

NAMA has concluded its review of business plans from the top 30 property developers accounting for around €27bn of the acquired loans.