The Central Bank has this evening published stress tests on the Irish banks showing that an astonishing €24bn will be needed to be put into the banks to help them cope with potential losses.
The main points of the report in the past few minutes gives a break down of how much each bank will need with AIB at the top of the credit list.
The breakdown is as follows:
And there’s even more bad news as the Central Bank assessment found that the banks could face losses of €37.7 billion over the next three years under the worst-case, or ‘stressed’ scenario.
The tests found that banks would need €18.7 billion in new capital to meet new Central Bank targets, but the bank also added another €5.3 billion to bring what it called ‘a layer of resilience’ in case of possible further losse after 2013.
Central Bank Governor Patrick Honohan also set targets for how far the banks must reduce in size, through a combination of run-downs of assets and sales of assets.
Professor Honohan said the aim was to create a sustainable Irish banking system through a combination of recapitalisation, deleveraging and reorganisation.
Prof Honohan said smaller, but sounder, Irish banks should be in a better position to provide loans and other financial services to households and businesses to support the Irish economy.
In the worst-case scenario, the four banks could lose €9.5bn from home mortgage loans over the next three years.
Minister for Finance Michael Noonan has told shocked TDs in Dail Eireann his proposals for restructuring the banks.
He said there will be two universal, full-service banks and a restructured Irish Life & Permanent.
What he called the ‘first pillar’ bank will be based on Bank of Ireland, with the second one a combination of AIB and the EBS building society.
