The Republic of Ireland will have to go to the IMF/EU for another €15bn - on top of the €35bn already earmarked - to save the banking system, according to the government-appointed chairman of Anglo Irish Bank.
In a bombshell revelation, Alan Dukes said we will need 40pc more, or €50bn, to properly clean up the banks.
The former finance minister also sensationally suggested €75bn would be needed to fund the existing NAMA operation and a so-called 'NAMA 2' to take more bad loans from the banks.
His claims sparked a furious rejection from the Department of Finance who said that Central Bank Governor Dr Patrick Honohan had pinpointed a much lower figure.
If Mr Dukes's assessment is true, it would mean taxpayers would have to foot interest on another major loan which would almost inevitably lead to even more stringent Budgets.
The row over the banks completely overshadowed the first TV debate between the leaders of Fianna Fail and Labour.
It will also bring into sharp relief the approach all the parties have to renegotiating the interest rate on the current €85bn IMF/EU bailout deal.
It also came as:
- The Government ordered the sale of deposits at Anglo and Irish Nationwide by auction, effectively winding down these institutions.
- Anglo revealed the largest loss in Irish banking -- at €17.6bn for 2010.
- Job losses were confirmed at both Irish Nationwide and Anglo Irish.
Markets grew nervous after Finance Minister Brian Lenihan made remarks about some senior bondholders sharing the burden of the banking crisis.
Mr Dukes spoke bluntly of the grim outlook at a business conference in Cork: "A clean banking core will require somewhere in the region €50bn of new capital. Currently, Irish banks are unable to raise capital at this level from the markets.
"The necessary capital must therefore come from Government, EU, IMF or other external sources,'' he added.
He also said it was time for the outgoing government to sit down and discuss the banking crisis with the parties most likely to form the next government.
His comments came as Labour leader Eamon Gilmore failed to secure the comprehensive victory in the first leaders' debate that would have ignited his party's 2011 General Election campaign.
But Fianna Fail leader Micheal Martin took several hits last night on his record in government over the past 15 years.
Mr Gilmore went head-to-head with his new Fianna Fail opponent, while Fine Gael leader Enda Kenny snubbed the debate, choosing instead to address a party meeting in a town hall in Co Leitrim.
Mr Gilmore failed to secure the win that would raise him above Mr Kenny as the potential leader of the new government.
Mr Martin performed better than expected and frequently went on the attack -- despite his own track record as a minister in government, which Mr Gilmore highlighted.
Earlier yesterday the High Court approved an order to sell off the €14bn deposit books of Anglo Irish Bank and Irish Nationwide and wind-down the two institutions.
The Government has already been sounding out potential buyers for the deposit books, and sent confidential letters to several banks last week.
The Department of Finance is hoping a buyer for the deposits will be secured within the next fortnight.
Once the deposits have been stripped out of Anglo and Nationwide, the institutions' remaining loan books will be merged into a new bank.
The Irish Independent has learned the new bank will be able to hold some deposits and carry out some lending, but only on a very "limited" scale.
Source Irish Independent