Belfast Telegraph

Just two banks left standing after clear-up

The fifth attempt to clear the mess of years of reckless lending by Irish bankers slashes the homegrown finance industry to just two institutions.

Bank of Ireland, the oldest in the country, is in a struggle to avoid the fate of its competitors and remain in private hands.

Executives are on the same page as Finance Minister Michael Noonan who set the bank up as the first "pillar" in a revived sector built from discredited lenders.

The government is willing to give the Bank of Ireland time to raise its own cash and stave off further taxpayer bailouts but it has also been told to sell-off €30bn-worth of assets by 2013.

Two businesses it can keep are its Northern Ireland division and the Post Office venture in the UK.

The second "pillar" is an all new banking house formed from the ashes of two hard-hit lenders, EBS Building Society and Allied Irish Bank, which welcomed the decision.

Only on Wednesday, on the eve of the stress test results being published, Mr Noonan pulled the plug on a deal to sell EBS to private equity group Cardinal Capital, claiming that the bid was not sufficiently commercially attractive.

Now the plan is to get the two drastically reduced lenders to build on what strengths remain and create a second domestically focused operation.

AIB must shed €23bn of assets but like the Bank of Ireland, its former sparring partner in the world of international borrowing and lending, it will keep its Northern Ireland business and deposit-funded operations in the UK.

Elsewhere, the Irish Life -amp; Permanent group has been dealt a shattering blow.

Home to the country's biggest mortgage provider, Permanent TSB, and pension provider Irish Life, the group is to be sliced up with its life and pensions and investment management businesses, Irish Life Assurance and Irish Life Investment Managers, to be sold.

Along with other initiatives the group aims to take in €1.1bn.

Group chief executive Kevin Murphy claimed IL-amp;P was forced into a solution, to draw a line under the banking crisis.

"It had been our strong belief that the group could avoid the outcome which has arisen," Mr Murphy said.

Popular