The tests, conducted by the central bank and BlackRock, found that the four institutions – Allied Irish Banks, Bank of Ireland, Irish Life & Permanent and Educational Building Society – require further funding on top of the €46bn bailout package already allocated to Ireland’s financial system.
Allied Irish Banks, which yesterday reported a record pre-tax loss of €17.7bn for 2010, requires €13.5bn, Bank of Ireland €5.2bn, Irish Life & Permanent €4bn and EBS €1.5bn.
“The scenarios and modelling being used are not intended to provide forecasts of what will happen. Indeed, the thrust of the banking policy – including the other announcements of the financial measures programme which will be made by the government today – is to seek to ensure that the banks, their customers, and the nation in general get out of this situation with much less cost, distress and dislocation. The central bank’s forecasts for the economy are much more optimistic than the stressed scenario used,” said Patrick Honohan, governor of the central bank of Ireland.
The European Central Bank is expected to make up the additional requirements via a new financing arrangement, though a press conference scheduled for Thursday and expected to announce the terms of the financing was cancelled.
