Ireland: Banking Wreck Much Worse Than Previously Thought
March 30th, 2011Via: BBC:
Ireland’s central bank and new government will confirm on Thursday that the hole in the country’s banks is even wider, deeper and darker than seemed to be the case last November, when those bust banks forced the country to go with a begging bowl to the European Central Bank (ECB) and the International Monetary Fund (IMF) for 67.5bn euros (£59bn) of rescue loans.
Regulators at the Irish central bank have conducted a review of how much extra capital – as a buffer against future losses – is required by Bank of Ireland, Allied Irish Bank, EBS and Irish Life and Permanent.
Unless something unexpected happens in the next 24 hours, the total amount of additional capital that will need to be injected into these banks will be a bit less than 35bn euros – including 8bn euros that was supposed to be injected into them at the end of February, but was postponed because of Ireland’s political turmoil.
Anyway, let’s assume that the total amount extra that these banks need is circa 30bn euros. That would take the total quantity of state investment in Ireland banks to a breathtaking 75bn euros (actually a tiny bit more than that).
That is an almost unbelievably large number. When I think about it, I have a small panic attack – because it represents 45% of Ireland’s GDP and 55% of its GNP.
