Bank of Ireland, currently 36% State-owned, would become majority Government controlled.
It emerged last night that the EU and the IMF will offer the Government an €85 billion facility which can be used to recapitalise the banks and fund the public finances.
The package would see the level of capital in the Irish banks being increased from 8% to 12% in a move to bolster confidence of depositors in the financial system.
Last week the IMF and EU team began intensive meetings with the Central Bank to re-shape the financial system for the future. Their plan would boost levels of capital in banks, to cushion against future loan losses.
The 12% capital figure - a measure of how much funds the banks must hold in reserve - is significant by international standards. It is aimed at boosting confidence - particularly for depositors who are also covered by the EU bank guarantee.
The money will come from an €85 billion facility provided by the EU and IMF. The remainder of the funds will be used to run the country on a day-to-day basis - perhaps over a two to three-year period.
While the authorities are reluctant to fully nationalise AIB, it will need significant new funds. One option is that the state will be left with an 99.9% stake the bank in return for the new capital. The plan would also take some bad loans out of its AIB's UK subsidiary and try to sell the division again.
Bank of Ireland, currently 36% State-owned, would become majority Government controlled. Authorities are hopeful of selling off EBS quickly.
The size of Irish banks would be significantly reduced as blocks of loans would be sold off. Some investors would be offered loss-sharing arrangements with the State.
It is likely that a formal letter of intent will be issued by the IMF to the Government early next week containing final details.
The package would see the level of capital in the Irish banks being increased from 8% to 12% in a move to bolster confidence of depositors in the financial system.
Last week the IMF and EU team began intensive meetings with the Central Bank to re-shape the financial system for the future. Their plan would boost levels of capital in banks, to cushion against future loan losses.
The 12% capital figure - a measure of how much funds the banks must hold in reserve - is significant by international standards. It is aimed at boosting confidence - particularly for depositors who are also covered by the EU bank guarantee.
The money will come from an €85 billion facility provided by the EU and IMF. The remainder of the funds will be used to run the country on a day-to-day basis - perhaps over a two to three-year period.
While the authorities are reluctant to fully nationalise AIB, it will need significant new funds. One option is that the state will be left with an 99.9% stake the bank in return for the new capital. The plan would also take some bad loans out of its AIB's UK subsidiary and try to sell the division again.
Bank of Ireland, currently 36% State-owned, would become majority Government controlled. Authorities are hopeful of selling off EBS quickly.
The size of Irish banks would be significantly reduced as blocks of loans would be sold off. Some investors would be offered loss-sharing arrangements with the State.
It is likely that a formal letter of intent will be issued by the IMF to the Government early next week containing final details.
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