Friday November 28, 11:40 PM
Irish state may invest in banks rescue package: minister
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DUBLIN (AFP) - The Irish government may consider supplementing private investment in the country's six main banks with state cash, Finance Minister Brian Lenihan said Friday.
In a statement after day-long meetings with the chairmen and chief executives of six Irish banks covered by a state guarantee scheme, the Minister said the talks about securing a stable and active banking sector had been "productive and informative".
He asked the banks "to consider the contribution that they can make to the economy through appropriate credit initiatives in relation to small and medium sized businesses and otherwise, and to come back to me on this matter within the next ten days."
In a statement the finance ministry said Lenihan noted that "certain institutions are already in discussions with potential investors, and he encouraged the institutions concerned to progress these discussions".
"The Minister indicated that in certain circumstances it would be appropriate for the state, through the National Pensions Reserve Fund or otherwise, to consider supplementing private investment with state participation, where in doing so the aim of securing the financial system can be better met.
"In that regard, the Minister is open to evaluating proposals from potential investors which would add value to the security and stability of the financial system and its ability to contribute in a positive way to economic development."
Lenihan, who has previously stated that using public money to support the banks in the ongoing global financial crisis was "a last resort", said the appropriateness of state involvement would be assessed on a case-by-case basis.
"The relevant institutions have agreed that they will work closely with potential investors and the Government to develop matters further by the end of the year," the statement said.
It added that Lenihan had made no proposals about consolidation of the banks.
Recession-hit Ireland was one of the first countries to respond to the credit crisis with a two-year unlimited guarantee scheme for banks that involves a contingency liability of 485 billion euros (611 billion dollars).
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