Lenihan to engage with EU on AIB capital

MINISTER FOR Finance Brian Lenihan is preparing to engage with the European Commission on the need for new capital at Allied Irish Banks (AIB) to bring its balance sheet to a “credible” position after its loans move to the National Asset Management Agency.

The Minister also predicted a “clean-out at the executive level” within the nationalised Anglo Irish Bank, an institution whose restructuring plan was submitted to the commission on Monday.

Speaking in Brussels a day after AIB suspended paying interest on the Government’s preference shares in the bank on foot of an instruction from commission’s competition division, Mr Lenihan reiterated that the Government will provide new capital to the bank if it fails to raise fresh capital from private sources.

“The banks have expressed an interest in raising funding on the private markets. They’re entitled to that. But the State has made it clear also that if necessary it will inject the necessary capital.

“It is important to notice that the commission has said it will support the efforts of AIB to raise private capital, including measures aimed at providing adequate remuneration to the Government’s preference shares.”

Mr Lenihan said Anglo’s chief executive Mike Aynsley has identified and assessed all of the impaired loans of all current and former executives.

“Legal proceedings will be instituted against any executive who fails to repay his loans, current or former,” he said.