Lenihan postpones bank injections

The Government is to postpone further capital injections for AIB, Bank of Ireland and the EBS Building Society until after the election.

In a statement this afternoon the Department of Finance said the Government was taking the step to allow the election to take place on February 25th before the necessary injections are made.

The department said Minister for Finance Brian Lenihan has told the European Commission that it is the “Government's view that, because of the democratic process, this issue should be addressed by the incoming government”.

Under the terms of the IMF-EU bailout plan, it was agreed that the institutions would have a 12 per cent core tier 1 capital ratio. This was to be in place by the end of February.

The department said the banks are adequately capitalised, even without the promised injections, and the delay would pose no regulatory or stability issues.

In a statement tonight Fine Gael's Michael Noonan questioned Mr Lenihan's deferral of the recapitalisation.

“At first glance the statement by Brian Lenihan that he is deferring the recapitalisation of the banks due before the end of February, until after the election, looks like a classic Fianna Fáil political stroke to ensure they are not announcing bad news which would aggravate taxpayers in the last week of the election,” the Fine Gael finance spokesman said.

“Even if we give Mr Lenihan the benefit of the doubt, he should explain how a deal which he maintained could not be renegotiated in any respect, can now be departed from unilaterally."

In a statement this evening, the Central Bank said it noted that the requirement for AIB, Bank of Ireland and EBS to achieve a 12 per cent capital ratio had been extended.

"All programme deadlines are ultimately the responsibility of the Department of Finance and the Central Bank expects that the timeline will be set early in the life of the new Government," it said.

A spokesman for the IMF it is important that the delay is temporary, and the authorities recapitalise the banks as agreed under the program.

An interim review of the implementation of the programme agreed by the Government under the IMF-EU bailout said targets under the program have been met.