Ireland's Stricken Banks Require Fresh €42.4 Billion Bailout

Ireland's beleaguered banks are in dire need of a fresh state bailout worth €42.4 billion ($34 billion), as determined by the country's central bank. This comes after the EU-IMF financial rescue in late 2010, which provided a €485 billion bailout. The fresh bailout will be taken from the EU-IMF pot and will be used to recapitalize, reorganize, and deleverage the banks. This is a crucial step in creating a sustainable Irish banking system.

Key Takeaways:

• The four banks, Allied Irish Banks, Bank of Ireland, Educational Building Society, and Irish Life & Permanent, will collectively require €42.4 billion in capital to be raised.
• The €42.4 billion will be taken from the EU-IMF bailout pot and comes after the Irish government has already pumped €143 billion into the country's lenders since the start of the global financial crisis in 2008.
• The fresh support aims to create a sustainable Irish banking system through recapitalization, deleveraging, and reorganization.
• Banks will be capitalized with additional capital requirements announced to provide for future loan losses over the next three years on an unlikely scale and an additional buffer for subsequent events.
• AIB and BoI shares were suspended by the Irish Stock Exchange to prevent market turmoil.
• Anglo Irish Bank, already nationalized, posted a loss of €17.7 billion ($25 billion) for 2010, a record for an Irish company.
• Ireland has nationalized four lenders over the past two years, including Anglo Irish Bank, AIB, EBS, and Irish Nationwide Building Society.

Statistics:

• €42.4 billion: The amount required for the fresh state bailout.
• €485 billion: The total EU-IMF bailout package.
• €143 billion: The amount already pumped into the country's lenders by the Irish government.
• €17.7 billion: The loss posted by Anglo Irish Bank for 2010.

Sources:

• "Ireland's stricken banks require fresh state bailout worth €42.4 billion", The Irish Times, Thursday, [n/a]
• "Ireland's Stricken Banks Require €42.4 Billion Bailout", Khaleej Times, [n/a]
• Statement by the Governor of the Central Bank, Patrick Honohan, [n/a]