The Irish government plans to inject €7bn into Allied Irish Banks and the Bank of Ireland, while shareholders in Fortis have rejected proposals to sell the bank's Belgium assets to BNP Paribas prompting concerns of a government bail-out.
Allied Irish Banks and the Bank of Ireland have welcomed the government's decision to pump €3.5bn into each bank in return for an option to buy 25% of ordinary shares in the lenders.
Kevin McConnell, head of research at Bloxham Stockbrokers in Dublin, is concerned that without clarity on an insurance scheme or creation of a bad bank, there is "uncertainty over the size of the impact of bad debts on capital levels".
With the Irish economy shrinking at the fastest rate out of the euro area, Irish financial stocks have plunged 93% over the last year.
Finance minister Brian Lenihan believes the government has "got it right" in terms of capital.
"No government in the world has been able to devise a totally satisfactory scheme of risk assessment," he says. "We will continue to work on that."
Meanwhile, shareholders in Fortis have revolted against plans to sell its Belgium assets to French lender BNP Paribas throwing Fortis' future into doubt, according to the Times.
Approximately 5,000 shareholders representing a fifth of the bank's capital narrowly rejected the hurried transaction first proposed in October.
The deal which would have prompted the sale to BNP Paribas was supported by 49.74% of shareholders.
Having championed the sale, the vote outcome will come as a blow to the Belgium government who may now have to rescue the troubled bank.
Last year Fortis lost €19bn and currently faces a liquidity shortfall of about €2.3bn. The collapse of the takeover deal will also be a disappointment to BNP Paribas' Belgium and Luxembourg expansion ambitions.
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