The EU and IMF have offered Ireland a €85 billion bailout to be used for the country’s baning sector and its public finances, according to RTE.
As part of the deal AIB may be fully nationalized.
While the authorities are reluctant to fully nationalise AIB it will need significant new funds. One option is that the State will be left with an 99.9% stake the bank in return for the new capital.
So it appears AIB is on the brink of a full nationalization. The Bank of Ireland may also become majority owned by the government.
As part of the deal, the amount of capital held by Irish banks will increase to 4%, from 8 to 12%. This is, according to RTE, to reassure those with accounts at the banks.
The move is not surprising considering PIMCO’s Mohamed El-Erian’s earlier remarks that individuals banking in Ireland should remove their deposits.
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