March 30 (Bloomberg) -- Three of Ireland’s biggest banks may have to raise a combined 9 billion euros ($12.7 billion) in capital after stress tests are published tomorrow, said five people with knowledge of the matter. Bank of Ireland Plc, the country’s biggest lender by market value, will seek as much as 5 billion euros, said two of the people. Irish Life & Permanent Plc will require more than 3 billion euros, while EBS Building Society will need about 1 billion euros, three people said. The people declined to be identified because the figures haven’t been made public yet. All three companies are based in Dublin. Ireland’s international bailout included as much as 35 billion euros for its lenders, including Allied Irish Banks Plc, which was the country’s biggest lender by assets during the country’s decade-long boom. While it isn’t yet known how much Allied Irish will need, the central bank told the company in November to raise 5.3 billion euros. The state will draw down about 20 billion euros, the Sunday Business Post said on March 27, without citing anyone. “These figures are broadly in line with emerging market expectations,” said Eamonn Hughes, an analyst with Goodbody Stockbrokers in Dublin, by telephone. “It’ll be a struggle for Bank of Ireland to keep the government’s stake below 50 percent.” Officials from Bank of Ireland, Irish Life, the Finance Ministry and Central Bank declined to comment. EBS spokesman Gerry O’Sullivan did not return calls to his office and cell phone. The government, which already controls 36 percent of Bank of Ireland, will lay out the banks’ capital needs after the central bank publishes the stress test results at 4:30 p.m. in Dublin. As part of the tests, Ireland’s banks are also being directed to hold enough capital to absorb as much as 20 percent losses on some assets they have to sell to reduce their balance sheets over the coming years, according to three people familiar with the situation. Ireland’s banks are being stress tested against a worst- case scenario of lenders making losses of about 10 percent on their Irish home-loan portfolios, according to three people familiar with the situation. --Editors: Dara Doyle, Ed Evans To contact the reporter on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net To contact the editor responsible for this story: Tim Quinson at tquinson@bloomberg.net |
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