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Fresh Irish bank bailout nears end game

The Irish government is expected to present bank recapitalisation plans on 30 March, sending shares down on worries they would have to raise more capital than earlier thought.

The finance ministry is thought to be preparing to present bank recapitalisation plans next week and give an update on the price the bad bank will pay for property loans.

The valuation of the first tranche of loans to be transferred by next week is expected to cause a negative surprise. That in turn would require the banks to raise more capital than earlier expected. “It will be negative for the banks,” one Dublin-based trader said.

Dublin has already pumped a total of €11bn (£9.8bn) into Allied Irish Banks, Bank of Ireland and nationalised Anglo Irish Bank, all of which will need further capital as they transfer loans to the National Asset Management Agency (NAMA).

The two biggest listed banks will try to raise capital from private sources first but the government may have to help them. It will certainly have to bail out other NAMA participants, which also include building societies EBS and Irish Nationwide. Finance minister Brian Lenihan was expecting to pay €54bn for property loans with a combined book value of about €80bn.