Republic’s banks face fresh woes

 
Steve Dinneen
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THE cost of recapitalising Irish banks could be even higher than the €22-27bn estimated.

The potential cost of large-scale defaults in residential mortgages, currently not included in the Nama “bad bank” programme, has not been factored into recapitalisation figures by credit analysts.

If Nama is forced to accept distressed residential loans for the first time it would cause a spike in contingent liabilities for the state.

Meanwhile, Ireland may create a second “bad bank” by merging the remaining operations of Anglo Irish Bank and building society Irish Nationwide, and using that entity to take bad loans from other banks.