IMF bail-out sees bank shares jump
Shares in Irish banks have jumped in the wake of the 85 billion euro bail-out of the country's crippled economy from the International Monetary Fund (IMF) and Europe.
Bank of Ireland was up almost a fifth to 32 cent, while Irish Life & Permanent soared more than a half to 80 cent. Allied Irish Banks saw a hike of 6% to around 36 cent.
The rescue deal, which includes 35 billion euro for the banks, was approved at an emergency meeting of European Union finance ministers in Brussels on Sunday - a day after 50,000 protesters marched through the streets of Dublin against the country's drastic austerity measures.
Taoiseach Brian Cowen warned that without the loan, pending tax hikes and spending cuts would be more severe. He said it was essential for the country and in the best interest of its people and the eurozone.
"It allows us to move forward with secure funding for our essential public services, for our welfare state, for the most vulnerable members of society that depend on them," he added.
The overall loan facility includes up to 35 billion euro to support the banking system - 10 billion euro of which will be drawn down immediately for the recapitalisation at a rate of 5.8%. Some 50 billion euro will cover financing the state.
Of the 85 billion euro, Ireland itself will contribute 17.5 billion by raiding pension funds to prop up the ailing banks and the Bank of Ireland is being given the chance to raise 2.1 billion euro in capital itself by February to avoid the Government stepping in. Irish Life & Permanent said it would have to raise an extra 100 million euro but would use its own resources.
Noel Dempsey, Transport Minister, said his view on the negotiations was that Ireland would not have been able to secure the bailout if they tried to "burn the bondholders". "There would be no deal if we went down the route some people were suggesting," Mr Dempsey said.
Opposition politicians claimed the bail-out agreement amounted to a national sell-out that would leave the country crippled with debt. Pat Rabbitte, Labour Party justice spokesman, called on the Government to clarify the legal status of the bail-out deal, suggesting it should be approved by the country's parliament.
The Irish Government applied for the loan last Sunday when it conceded the bank crisis was too big for the country.