Irish state to nationalise rest of its major banks

IRELAND is set to nationalise the remainder of its stricken banking system, Irish Prime Minister Brian Cowen said yesterday.

The plunge in share prices for Bank of Ireland and Allied Irish Banks this week could leave the state in majority control of Ireland’s three major lenders, with Anglo Irish Bank already having been nationalised. With the banks desperate for cash and with investors steering clear, it is likely to be left to the government to prevent them from collapsing with further cash injections.

Since Monday, AIB has seen 28 per cent wiped off its value while Bank of Ireland stock has plunged 42 per cent. The banks are also now dependent on the European Central Bank for their survival, with the ECB supplying them with €130bn (£110) in October alone.

Cowen’s comments come even as Irish central Bank governor Patrick Honohan said that the government stake in the banks was “for sale”.

Meanwhile, Moody’s ratings agency warned that the Irish government was being too optimistic about economic growth and threatened a “multi-notch downgrade” as a result. S&P has also cut Ireland’s rating from A to AA-.