Sign up to The Irish Times Archive (1859 - 2008)My Account »

THE LOSSES announced yesterday by AIB, the country’s biggest bank, serve to highlight the perilous state of the banking sector and its dependence on the State coming to its rescue. One figure stands out from the interim results which cover trading in the first half of the year. A quarter of the bank’s loans are now classed as distressed in one way or another. The figure was nearer one in 10 six months ago.

It is a shocking statistic and one that calls into question AIB’s future as an independent entity. Under the State-funded bank rescue plan, AIB will have to sell its land and property loans at a loss to the yet to be established National Asset Management Agency (Nama). Yesterday, the bank’s management – led by outgoing chief executive Eugene Sheehy – said they simply did not know what the consequences of absorbing these losses might be for the bank. The only certainty is that, under the Government plan, the taxpayer will support the banks, investing more money if necessary. If the losses are sufficiently big, the Government could end up owning more than 50 per cent of AIB.