22 Dec 2008

Ireland to inject 5.5 billion euros into three banks

9:43 am on 22 December 2008

The Irish government is to inject 5.5 billion euros into three of Ireland's major banks, as part of a recapitalisation rescue package.

A statement from the finance ministry said on Sunday the financing involves an initial investment of 1.5 billion euros for Anglo Irish Bank, and 2 billion euros each to Bank of Ireland and Allied Irish Banks.

The government's move follows disclosures last week that Anglo Irish's chairman and former chief executive officer Sean FitzPatrick failed to disclose a loan from the bank of 87 million euros.

Mr FitzPatrick resigned on Thursday, as did a non-executive director. He had been the bank's chief executive for almost two decades before becoming chairman in 2005.

On Friday, group chief executive David Drumm stepped down saying news of the concealed loan made it "appropriate" for him to quit.

Ireland has already issued a two-year unlimited guarantee scheme for banks that involves a contingency liability of 485 billion euros.

Finance Minister Brian Lenihan also announced a 10 billion euros rescue of Ireland's six main banks a week ago.