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 believ...
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