Ireland to hike bank stakes

THE Irish government could end up with a majority stake in several banks after the implementation of a state-run National Asset Management Agency (Nama) to house &euro;90bn (&pound;55.7bn) of the sector&rsquo;s bad debts, finance minister Brian Lenihan said yesterday.<br /><br />&ldquo;As I have already noted, some institutions may need capital after they have transferred loans to Nama,&rdquo; Lenihan told a parliamentary committee.<br /><br />&ldquo;This will increase the state&rsquo;s ownership in these banks and in some cases that may result in a majority shareholding but I believe this is a more discriminate and effective policy than blanket nationalisation.&rdquo;<br /><br />However, several analysts suggested yesterday that Bank of Ireland and Allied Irish Banks, each of which are 25 per cent state-owned, might be allowed to launch rights issues to avoid falling further into government hands.<br /><br />Lenihan also said that the Irish property crash was &ldquo;approaching the trough&rdquo;, following a warning from the European Central Bank not to pay too much for property loans likely to be transferred into Nama.<br /><br />&ldquo;We really do need to banish our devils... this suggestion that we have further to go down and further and further and further,&rdquo; Lenihan said.<br /><br />&ldquo;The property yield is at an all-time high relative to the assets, which is a clear, objective economic indicator that we are approaching the trough.&rdquo;<br /><br />Lenihan&rsquo;s plans to rescue the former Celtic Tiger&rsquo;s banks have attracted criticism from the opposition Fine Gael party, which prefers a &ldquo;good bank, bad bank&rdquo; solution to a wholesale transfer of toxic assets into Nama.