Mortgage News
Irish banks need extra €24bn to survive crisis
The Republic of Ireland’s banks need an extra €24bn (£21.2bn) to survive, bringing the total amount poured into the Irish banks since the financial crisis close to €70bn.
The figure follows a stress test on the Irish banking system by a group of independent experts and the country’s central bank, the BBC reports.
Four lenders were tested – Allied Irish Banks, Bank of Ireland, Educational Building Society (EBS) and the Irish Life & Permanent.
Allied Irish Banks need the most money, and will have to raise €13.5bn.
Bank of Ireland needs €5.2bn, EBS €1.5bn euros, and Irish Life €4bn.
The state already owns most of Anglo Irish Bank, Allied Irish Banks and the EBS following previous rescues of the banks.
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Honohan says it is likely that, as part of the next infusion of funds, Bank of Ireland and Irish Life & Permanent would now have to be taken into state control.
Money set aside from the €85bn EU-IMF bail-out agreed in November will be used to fund the latest recapitalisation.
Until now, losses in the Irish banking system have stemmed from the collapse of a speculative bubble in the commercial property sector, where billions were borrowed from the banks to fund hotels and shopping malls.
However, the latest stress tests focused instead on an emerging meltdown in the residential sector.
The stress tests assumed a cumulative collapse in property prices of 62% – a level already reached in some parts of the Republic.