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December 22, 2008    

Irish Government steps in to assist country’s largest banks

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by Kay Murchie

The Irish Government has confirmed it is to provide €5.5billion (£5.12 billion) to the country’s three biggest banks.

The three struggling banks, which are the Bank of Ireland, AIB (Allied Irish Bank), and Anglo-Irish, are to receive the funds in return for shares.

Anglo-Irish is set to receive €1.5 billion in return for 75% shares with an annual fixed dividend of 10%, while the Bank of Ireland and Allied Irish Bank are to receive €2 billion each for an annual dividend of 8%.

A shortage of liquidity has meant the country’s three largest banks are finding it difficult to lend money to customers.

The Irish Government said it is hoped that the new capital will maintain a strong lending position the country’s mortgage market.

Irish Prime Minister, Brian Cowen, said the recapitalisation will send a strong signal to the markets about the stability of the Irish financial system.

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