Allied Irish Bank 'nationalised'
Allied Irish Bank has effectively been nationalised after the Government got the green light to pump in another 3.7 billion euro of taxpayers' money.
The High Court signed off on the massive cash boost lined up by Finance Minister Brian Lenihan under tough new banking laws imposed this week.
The money means the State has a 49% stake in AIB - once Ireland's biggest bank - which will soar to 92% when lucrative divisions of the finance group are finally sold off next year.
Mr Lenihan said the billions of taxpayers' money was essential for AIB to fulfil its role in the economy.
"The order allows the Minister to provide capital so as to ensure AIB meets its year-end capital requirement as set by the Central Bank," he said. "This capital is essential to allow AIB to fulfil its role in supporting the Irish economy."
Mr Lenihan set out the possibility of having to pay the billions last March and the move was prompted after the bank suffered further losses as property based loans were transferred to Ireland's bad-bank, the National Asset Management Agency (Nama).
"AIB has raised a significant amount of capital from its own resources," Mr Lenihan said.
"However, further State assistance has proven necessary given the level of losses that have materialised on its Nama bound loan book and also due to the international expectation for higher capital ratios."
The payment, which is coming from the country's National Pension Reserve Fund, has been agreed by the European Union and the International Monetary Fund which is overseeing an 85 billion euro bailout for Ireland.
The Irish Government initially takes a 49.9% stake in AIB through ordinary shares and the stock holding will rise to 92% when the bank's Polish division is sold to Spanish banking giant Banco Santander next year.