Irish Govt Postpones Capital Injections To 3 Banks Ahead Of Election
LONDON (Dow Jones)--Ireland's Finance Minister Brian Lenihan Wednesday said the government had postponed further capital injections into Allied Irish Banks PLC (AIB), Bank of Ireland PLC and EBS Building Society until after the Feb. 25 election to allow the new government to address the issue.
The terms of Ireland's EUR67.5 billion financial aid package from the European Union and International Monetary Fund, or IMF, stipulate the Irish government must ensure the three banks are capitalized to a level of 12% of Core Tier 1 capital by the end of February.
Lenihan said in a statement he had informed the European Commission, IMF and European Central Bank that it was the government's view that the issue should be addressed by the incoming government.
"Even without further capital injections these banks are adequately capitalized and the short delay poses no regulatory or stability issues," the statement said.
Earlier Wednesday, the IMF warned Irish banks remain under stress, while repairing the system will be difficult and could be subject to unwarranted delays as a result of general elections to be held in February.
These elections are likely to result in the formation of a new coalition government comprising the right-of-center Fine Gael party and left-of-center Labour Party. They will have to agree a common approach to cutting the budget deficit and dealing with the banks.
But the IMF acknowledged there is considerable public opposition to continuing to support the banks through fresh capital injections and maintaining a government guarantee on their bond debts.
"The public response to the program has remained favorable, but a lingering domestic perception of inequitable burden sharing persists," the fund said.
Irish Govt Postpones Capital Injections To 3 Banks Ahead Of Election - WSJ.com