ANGLO IRISH Bank is to ask the Government for a further cash injection of up to €2.5 billion in order to keep its capital base above the minimum levels required under the terms of its banking licence.

A spokesman for the Department of Finance said yesterday that it had not received any official contact from Anglo Irish Bank in relation to the need for further cash. Anglo declined to comment.

However, it is understood that senior executives at the bank are preparing to ask for €1.5 billion by the end of May in order to satisfy capital requirements set by the Financial Regulator.

The bank’s bad debts have grown larger than was projected when the bank was nationalised in January and a further deterioration in the loan book means the bank may have to ask for an additional injection of €1 billion over the next 12 months, the Sunday Times reported.

The bank is close to completing its review of its loan book, which it is conducting under the supervision of the regulator and PricewaterhouseCoopers.

Anglo Irish Bank executive chairman Donal O’Connor is finalising a new business plan for the lender and how much cash is invested in the bank will depend on whether the Government believes it has a future as a trading bank. Most of Anglo Irish Bank’s loan book is likely to be eventually acquired by the National Asset Management Agency (Nama).

The Government has already committed to injecting €7 billion into AIB and Bank of Ireland and further requests for capital will put extra strain on public finances.

The Department of Finance is due to publish Exchequer returns data for April tomorrow, which is expected to show a widening in the Exchequer deficit. AIB’s economic research team has forecast that the deficit will widen from €3.7 billion as of the end of March to €8 billion at the end of April.